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Beyond Reality

Vection Technologies Limited ACN 614 814 041

ANNUAL REPORT 2023

Beyond reality

2023 I Vection Technologies Limited I Annual Report I 1

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Technology advantage and strategy

11 Financial highlights

Key market segment and global footprint

13 CEO’s report

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OUR JOURNEY

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$1m
Group Revenue
$3m
Group Revenue
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$10m
Group Revenue
$19m
Group Revenue
$26m
Group Revenue
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TECHNOLOGY ADVANTAGE

Revolutionizing business extended reality (XR) adoption via the INTEGRATEDXR workflow.

We provide end-to-end digitalization spanning ICT infrastructure, Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR), the Metaverse , and Artificial Intelligence (AI).

Our commitment extends to fostering client proficiency in the 3D revolution, including essential services like 3D modeling and rendering.

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CAD PLUG-IN Collaborative Virtual Reality (VR) Augmented Reality (AR)
Virtual Reality (VR) Design/Sales/Marketing/Training Step-by-step 2D/3D procedures
Bi-directional VR Visualizer/Editor Editor
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TECHNOLOGY ADVANTAGE

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CGI
3D Real-Time
Rendering
Extended Reality
WEB, APP, AI
Hardware
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IntegratedXR Technology Stack

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R&D
Operations
Marketing & Sales
Aftersales
HR
ITC Infrastructure
Integration
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Our strategy centers on seizing lowhanging opportunities to establish customer relationships and drive the 3D digital revolution, commencing with ICT and progressing to intricate 3D, AR, VR, and AI solutions .

As adoption widens, the upfront custom segment's percentage diminishes in our overall business composition.

This strategic approach is advantageous for customers as it enables gradual integration of advanced technologies while leveraging their existing ICT framework .

Our value proposition lies in providing a seamless pathway towards immersive experiences , enhancing operational efficiency, and future-proofing their digital investments. This aligned strategy ensures sustained growth and technological empowerment for both our customers and investors.

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KEY MARKET SEGMENTS

Defence, Space, Military & Law Enforcement Media & Communication 17 AEC & Real Estate Sports & Betting 35 Public Sector & Education 10 ~ $28m Other Healthcare & Pharma Service Agencies 19 Automotive & Naval 10 7 Fashion, Retail & Consumer Goods Machinery

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AEC & REAL ESTATE – 19%
SERVICE AGENCIES – 35%
DEFENCE, SPACE, MILITARY
& LAW ENFORCEMENT - 17%
MEDIA & FASHION, RETAIL & AUTOMOTIVE &
SPORTS & BETTING
COMMUNICATION CONSUMER GOODS NAVAL
HEALTHCARE &
OTHER PUBLIC SECTOR &
EDUCATION MACHINERY PHARMA
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XR CASE STUDIES - MAROTTA

CHALLENGES

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Stand out from the competition.
Highlight design features and innovation in live and remote presentations.
Decreasing design time by reducing the number of editing steps the client requires.
Lessening design time by reducing the time spent in data preparation of 3D models for use across the software.

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SOLUTION

Using 3DFrame, Marotta sets up virtual spaces to present project progress and initiate an interactive session with clients.
Integrating 3DFrame and Cisco Webex allows easier access and collaboration in cooperative virtual environments.
Utilizing 3DFrame integration into Webex enables Marotta to make presentations and discuss sessions more effectively, making the design process more efficient.

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EVIDENCE

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HEXAFLY project teams in an immersive and collaborative manner and without prototype construction can now:
Simulate operational maintenance activities in VR;
Simulate operational activities of stowage (loading and unloading) in the nacelle and check encumbrances for activities;
Share project details and opportunities with future customers.
The experience can be enjoyed in these modes:
ASYNCHRONOUS: each designer can independently simulate the relevant activities;
COLLABORATIVE: The designer shares project analysis in virtual reality with other departments/teams/remotes using the Webex platform.

Potential outcomes:

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XR CASE STUDIES - HUMANITAS

CHALLENGES

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Student accessibility to clinical practice spaces otherwise difficult to access.
Practice in multi-user (student) collaborative mode, even remotely.
• Practice in a secure environment.
Easy reuse and modification of material for new students or other purposes.
Possibility of continuous use of training material at no added cost.

SOLUTION

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Users can experience the procedures by:
Having direct interaction of the avatar with instrumentation;
Viewing an animated avatar interacting with models;
Viewing 2D and 3D infographic content.
• The experience can be unfolded in the following modes:
ASYNCHRONOUS : each user can independently enjoy the experience;
LIVE : the reference teacher (assisted by appropriate direction) guides the experience collaboratively and in real time through Cisco Webex Technology.

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EVIDENCE

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In collaboration with Humanitas liaisons, our experts mapped the hospital spaces and defined procedures and storytelling for the virtual experience. Clinical environments were remodeled in 3DFrame’s virtual spaces and then made accessible to students, residents, and specialists from the university’s Medicine School and Laboratory techniques.

Potential outcomes:

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COLLABORATIVE
GUIDED PROCEDURES
ENVIRONMENT
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GLOBAL FOOTPRINT

Our strategic investment in establishing a local presence within key markets significantly amplifies our customer-focused strategy and underpins their sustained global triumph.

This tactical move empowers us to grasp market intricacies, customize solutions, and offer rapid assistance .

Proximity fosters agility, cultural alignment, and synergistic collaborations.

This localized dedication not only underscores our commitment to customer satisfaction worldwide but also fortifies lasting relationships that drive mutual success.

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FY23 FINANCIAL HIGHLIGHTS

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Revenue
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$ 26.3m $ 11.4m

Closing Cash

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$ 69k
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$ 19.2m

Underlying EBITDA net of adjustments

Net Assets

Underlying EBITDA:[1,2]

Underlying EBITDA:1,2	Underlying EBITDA:1,2
Full year ended 30 June 2023 $		Margin on revenue FY23	Full year ended 30 June 2022	Margin on revenue FY22
		%	$	%
Profit (loss) after income tax attributable to members (10,820,472) -41,3% (6,681,487) -35,4%
Interest and financing related costs	355,761		94,245
Depreciation and amortization	1,217,307		957,899
Income Tax	54,995		167,813
One-off transaction costs and cost reduction	3,156,471		1,720,467
Non-cash accounting charges	5,077,083		3,148,694
Changes in inventory	563,891		84,831
Underlying EBITDA1	(394,964)	-1,5%	(507,538)	-2,7%
Listed entity related expenses	464,369		437,067
Underlying EBITDA net of adjustments	69,405	0,3%	(70,471)	-0,4%

(1) The Company assesses the underlying EBITDA on a half-yearly and yearly basis to assess its achievements towards forecasts. (2) Underlying EBITDA is an unaudited, non-AIFRS financial measure which is not prescribed by Australian Accounting Standards (‘AAS’).

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Organic growth generation:

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Acquisitions Organic growth
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$30
$26,3m
$25
$20
$15
$10
$5
$-
FY18 FY19 FY20 FY21 FY22 FY23
Millions
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Power of INTEGRATEDXR[®]

Proven track record of well-executed M&A transactions.
~200% increase in organic revenue growth generated from acquisitions strategy.
M&A generated ~$19m in organic growth in FY22.

NOTES

Organic growth rate and $ value is based on FY23 organic revenue growth compared to the combined revenue of the acquisitions on the full unaudited year’s revenue prior to acquisition.
Acquisitions include: Mindesk Inc (ASX: 28 April 2020), Blank Canvas Studios
(ASX: 27 April 2021) and JMC Group (ASX: 4 August 2021). Revenue figures above include the acquisition unaudited revenue on the full year prior to acquisition date.
Organic Growth includes: Vection (ASX: 12 April 2019) in addition to historical business and organic growth generated by the combined group following acquisitions. (audited).

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CEO’S REPORT

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“I am pleased to present a comprehensive overview of our Company's performance and strategic direction for FY23. Our commitment to driving organic growth, pioneering technological innovation, and prioritizing customer satisfaction has been instrumental in driving our achievements within a constantly evolving market landscape, all while adhering to the stated INTEGRATEDXR® strategy.

Despite the Company's presentation of a positive adjusted EBITDA (refer to the table contained in this report) for FY23, the overall loss was primarily influenced by non-cash accounting charges, notably the prudent impairment assessment of intangible assets. In a market characterized by robust expansion, especially within the global business-to-business (B2B) domain, integrated XR technologies have emerged as a dominant force.

Major market-leading enterprises are increasingly embracing these transformative technologies, notably in sectors such as CAD, ERP, CRM, and more, resulting in significant growth and global investment within the industrial sphere.

Despite the tough global economy with rising interest rates, inflation, and conflicts, the Company managed to achieve a successful result, even more remarkable considering we're in the early stages of market adoption in an emerging market.”

Fostering organic growth through innovation:

“The past fiscal year stands as a testament to our organic growth across diverse technological domains and markets, solidifying our standing as a dynamic industry contender. Despite being a relatively young company, we've harnessed the power of an innovative combined technology approach, known as INTEGRATEDXR®. It is important to highlight that this strategy requires time to fully mature.

We have diligently invested, and our commitment remains steadfast in advancing our solutions. The INTEGRATEDXR® concept has garnered increasing recognition from customers and governments in Italy, the USA, and Australia. While the provision of integrated solutions demands substantial expertise and investment, it promises robust growth and enduring global customer loyalty.”

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Strategic adaptation to dynamic markets:

“In a landscape marked by rapid changes, our dedication to enhancing our technology suite remains firm. This commitment stems from our unyielding focus on meeting the evolving needs of our customers. As we diligently evaluate and optimize our business' cost structure, we acknowledge the necessity of strategic investments to gain a competitive advantage, foster international expansion through both existing partnerships and new collaborations, as well as facilitate selective acquisitions.

In FY23, the Company prioritized its strategic partner relations focusing on technology, client engagement, and value creation for customers, with partners including Accenture and Cisco Webex. By investing substantial effort and resources into these key relationships, the Company showcased its commitment to fostering collaborative growth and innovation. These strategic efforts not only exemplify the Company's vision for synergy and growth but also solidify its standing as a trusted industry player capable of driving meaningful, sustainable results.”

Harmonizing Technologies:

Crucially, our Company is currently in an investment phase, strategically positioned to transition into profitability. By combining organic growth and selective acquisitions, our strategy positions us as a global contender, mitigating business risks and reinforcing our market presence. This concerted effort, guided by our experienced management, aims to cater to the escalating demand for digitalization on a global scale.”

Balancing growth and customer-centric approach:

“While our focus on expanding recurring revenue streams remains unchanged, we recognize that the market we operate in is still evolving. Consequently, our clients require a tailored, attentive approach as they embrace the transformative potential of the 3D revolution. Our commitment to delivering a premium experience remains firm, expediting the adoption of innovative technologies.

“Furthermore, groundbreaking technologies like ChatGPT have catalysed disruptive innovation within our market. In response, we have empowered our technology team to innovate at the intersection of ICT, 3D and AI. This fusion empowers our clients with distinct advantages and positions us at the forefront of the industry's evolution.”

Financial performance and forward Path:

“Our year's revenue growth has been remarkably encouraging and in line with projections. Although the initial half of the year experienced some deceleration due to external factors, the latter half witnessed a substantial recovery that enabled us to meet expectations. Our trajectory aligns with our verticalization strategy, focusing on tailoring technology solutions to specific industries.

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This approach involves the strategic integration of select technologies and experts with deep sector insights.

Industries such as defence, space, real estate, fashion, manufacturing, education, and healthcare have been central to our efforts and investments. This strategy extends to developing customized solutions, pursuing acquisitions, forging strategic alliances, and deploying top-tier managers to advance our market position.

Vection Technologies has successfully achieved its projected revenue goals for the fiscal year, effectively delivering on its anticipated revenue range of $24 to $26 million. The financial performance for FY23 reflects total revenue of approximately $26.3m, marking a noteworthy increase of 39% compared to the previous fiscal year's total revenue of $18.9m in FY22.

Additionally, the Total Contract Value (TCV) for FY23 amounted to $28 million, showcasing a 47% growth compared to the TCV in FY22. This emphasizes the Company's ability to consistently expand its business and secure valuable contracts.

During the year, we continued to adopt a personalized, white-glove approach to customer service. While this approach temporarily led to elevated costs of sales, it was a conscious decision to establish strong foundations for future growth.

The combined implementation of traditional technologies, XR, and AI is rapidly gaining traction across various industries.

As this integration becomes more prevalent, we anticipate a subsequent reduction in costs of sales in the upcoming years. The synergy between these technologies will drive operational efficiencies and open avenues for cost savings. Our INTEGRATEDXR® technology portfolio continues to be of paramount importance to our clients. By solidifying our relationships and nurturing strategic partnerships, we anticipate a favourable impact on our profit margins. This, in turn, will fuel a more dynamic and sustainable growth trajectory.

In terms of underlying EBITDA, FY23 generated a small positive underlying EBITDA,

In particular, the Company recorded $5.1m in non-cash accounting charges due to share-based issuances and prudent impairment on intangibles assets acquired during the prior years, $1.2m in depreciation and amortization, $0.6m in changes in inventory, and $0.4m in interest and financing related costs. Furthermore, during the period, the Company recorded $3.1m in oneoff and cost-reduction items, including $2.3m in reduction of non-critical personnel, consultants, and operating verticals expenses, $0.2m in one-off variable cost of sales, $0.5m in noncapitalized one-off investments in infrastructure, and $0.2m in extraordinary legal and consultants’ fees, mainly due to M&A initiatives.

The Company’s debt position was $10.3m, up from $3.6m at 30 June 2022, due to increased invoicing to customers being financed by leading commercial banks. As for the Company's cash position,

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it stood at $11.4m at the close of the fiscal year on 30 June 2023.

As the predominant portion of the debt originates from invoice financing, it will be settled upon customers' payments to the company, given its self-liquidating nature.

These financial figures collectively underscore Vection Technologies' substantial growth and financial stability, serving as a testament to its strategic initiatives and market presence.

In conclusion, our journey embodies a combination of innovation and service excellence. Our unrelenting pursuit of cutting-edge technology solutions and dedication to personalized service positions us optimally to harness the potential within a dynamic market. As we continue to refine our strategies and mature as a company, we extend our heartfelt gratitude for your unwavering support and trust in our vision.

Vection Technologies’ strategy boosts us toward a path of continuous growth, poised to grow our market presence in Europe, the USA, Australia, and subsequently, the Asian market. Our emphasis on integrated immersive technologies seamlessly aligns with the global trend towards digitalization, a trend we are well-prepared to lead.

We sincerely thank you for your support on this transformative journey.”

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CONTENTS

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18 CORPORATE DIRECTORY 19 DIRECTORS’ REPORT 31 AUDITORS’ INDEPENDENCE DECLARATION 32 CONSOLIDATED STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 33 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 34 CONSOLIDATED STATEMENT OF CASH FLOWS 35 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 36 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT 68 DIRECTORS’ DECLARATION 69 INDEPENDENT AUDIT0R’S REPORT TO THE MEMBERS 74 ADDITIONAL ASX INFORMATION

ANNUAL REPORT FY2023

PAGE 17

CORPORATE DIRECTORY

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Directors Mr Umberto (Bert) Mondello (Non-Execu�ve Chairman)
Mr Gianmarco Biagi (Managing Director)
Mr Gianmarco Orgnoni (Execu�ve Director)
Mr Jacopo Merli (Execu�ve Director)
Mr Lorenzo Biagi (Execu�ve Director)
Company secretary Mr Derek Hall
Registered office Level 4, Building C,
Garden Office Park,
355 Scarborough Beach Road,
Osborne Park WA 6017
Principal place of business Level 4, Building C,
Garden Office Park,
355 Scarborough Beach Road,
Osborne Park WA 6017
Phone: +61 8 6380 7446
Website: www.vec�on-technologies.com
Securi�es exchange lis�ng Australian Securi�es Exchange (ASX)
ASX Code: VR1
Share registry Automic Registry Services
Level 2,
267 St Georges Terrace,
Perth WA 6000
Phone: +61 8 9324 2099
Email: [email protected]
Auditor RSM Australia Partners
Level 32, Exchange Tower
2 The Esplanade
Perth WA 6000
Solicitors Steinepreis Paganin
Level 4,
The Read Buildings,
16 Milligan Street,
Perth WA 6000
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ANNUAL REPORT FY2023

PAGE 18

DIRECTORS’ REPORT

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The Directors of Vec�on Technologies Limited (the “Company”, “Group”, “Vec�on Technologies”, or “Vec�on”) present their report on the consolidated en�ty for the year ended 30 June 2023. The Company was incorporated on 14 September 2016. References to the results of the Group in this financial report for the year ended 30 June 2023 refer to the period 1 July 2022 to 30 June 2023. The terms “year” and “period” are used interchangeably in this report.

DIRECTORS

Mr Umberto (Bert) Mondello Non-Execu�ve Chairman Mr Gianmarco Biagi Managing Director Mr Gianmarco Orgnoni Execu�ve Director, CSO & CMO Mr Jacopo Merli Execu�ve Director & COO (Appointed 30 November 2022) Mr Lorenzo Biagi Execu�ve Director Mr Gabriele Sorrento Non-Execu�ve Director (Resigned on 30 June 2023)

PRINCIPAL ACTIVITIES

During the period, the principal con�nuing ac�vity of the Group consisted in developing and commercializing integrated digital transforma�on technology solu�ons and services part of its INTEGRATED XR[] suite, including ICT infrastructure, kiosks, mixed reality (MR), augmented reality (AR), virtual reality (VR), computer-aided design (CAD), 3D modelling and renderings, and ar�ficial intelligence (AI).

DIVIDENDS

REVIEW OF OPERATIONS

Report. The Chairman's Le�er and Managing Director’s Report precedes the Directors' report.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

On 7 June 2023, the Company announced the execu�on of a binding agreement to acquire the business of Invrsion S.r.l ("Invrsion"), a prominent technology company specializing in 3D and mixed reality solu�ons for the fashion, retail, consumer goods, and real estate sectors. The performance-based considera�on for the proposed acquisi�on is based on revenue milestones for the four-year period from the fiscal year 2023 to 2026 and vests a�er 30 June 2026. The acquisi�on was completed on 4 September 2023. The value of the considera�on payable is capped at ~$6.2m and is based on a $0.10 floor share price.

EVENTS OCCURRING AFTER THE REPORTING PERIOD

the results of those opera�ons, or the Group's state of affairs in future financial years.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

Other than informa�on disclosed elsewhere in this annual report, informa�on on likely developments in the opera�ons of the Group and the expected results of those opera�ons in future financial years has not been included in this Directors' Report because the Directors believe, on reasonable grounds, that to include such informa�on would be likely to result in unreasonable prejudice to the Group.

RISK AND GOVERNANCE

Poten�al risks associated with external technologies.

The Group relies on third-party off-the-shelf technologies, alongside its proprietary solu�ons, to support its INTEGRATED XR[] offering. These external technologies may be suscep�ble to issues beyond the Group's control, such as becoming obsolete or experiencing version conflicts. Such concerns could hinder the Group's ability to effec�vely upgrade and maintain its technology, poten�ally impac�ng its ability to serve customers. Moreover, the licensing condi�ons and pricing imposed by third-party providers may prove unsustainable or imprac�cal, poten�ally necessita�ng the Group to seek alterna�ve solu�ons or develop in-house op�ons. However, there is no certainty that the Group would be able to do so in a smooth and uninterrupted manner if the need arises.

Establishing and maintaining strategic rela�onships.

Success for the Group hinges on maintaining exis�ng strategic rela�onships and establishing new ones with industry and technology leaders. However, the ability to sustain or establish these crucial connec�ons remains uncertain.

Dependence on third-party providers.

ANNUAL REPORT FY2023

PAGE 19

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Several of the Group's technology solu�ons are designed to work with various external pla�orms, networks, systems, devices, and hardware. Any changes to these external elements could favour compe�ng products or nega�vely impact the func�onality of the Group's offerings, poten�ally leading to financial consequences.

Sales cycle variability.

cycle and product implementa�on schedule are influenced by various factors, including client nature and size, and complex decision-making processes, making predic�ons difficult.

As the Group strives to gain market acceptance in new markets, it may need to expand its opera�ons. However, its current systems, procedures, and resources may not be sufficient to support such growth. Consequently, difficul�es in managing expansion or inadequate upgrades to systems and infrastructure could arise.

Data security and hos�ng risks.

The Group stores data in its own systems and with various third-party service providers and hos�ng facili�es. These facili�es are suscep�ble to damage, outages, and cybersecurity threats, poten�ally resul�ng in data corrup�on, the�, or loss. While the Group is implemen�ng comprehensive cybersecurity measures, a cybersecurity incident could have severe consequences, including reputa�onal damage and increased costs.

currencies.

Regulatory challenges.

evolving regula�ons may pose challenges.

Mul�-jurisdic�onal risks.

As the Group expands its business to new markets, it becomes exposed to a range of mul�-jurisdic�onal risks, including labour prac�ces, environmental issues, contract enforcement difficul�es, and changes in legal and regulatory landscapes.

Economic condi�ons impact.

the Group's ac�vi�es and funding capabili�es.

condi�ons. As infla�on rises, the cost of technology components and equipment may increase, impac�ng the Group's expenses on hardware and so�ware. Addi�onally, labour costs may rise due to increased wages and benefits, poten�ally affec�ng the Group's opera�onal costs. Infla�on can also impact other aspects of the business, such as transporta�on, raw materials, and u�lity expenses.

Market condi�ons and share price vola�lity.

and investor sen�ment, regardless of the Group's opera�ng performance.

ENVIRONMENTAL REGULATION

INFORMATION ON DIRECTORS

ANNUAL REPORT FY2023

PAGE 20

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Name: Mr Umberto (Bert) Mondello Title: Non-Execu�ve Chairman Qualifica�ons: LLB Experience and exper�se: Mr Bert Mondello is an experienced public company director, corporate advisor, and technology expert with 20 years of experience across both the private and public sectors. Mr Mondello has widespread experience spanning retail and ins�tu�onal sectors and an extensive knowledge of marke�ng communica�ons and investor rela�ons. With deep-rooted exper�se across mul�ple technology sectors, Mr Mondello has provided strategic corporate advice and mentoring to several private and public organisa�ons interna�onally across mul�ple industries. He holds a Bachelor of Law from the University of Notre Dame, Australia. Other current directorships: Douugh Limited and Streamplay Studio Limited Former directorships (last 3 years): WestStar Industrial Limited and Sinetech Limited. Special responsibili�es: N/A Interests in shares: Indomain Enterprises Pty Ltd (Director-related en�ty): 5,500,000 Ordinary Shares. Interest in op�ons: Nil

Name: Mr Gianmarco Biagi Title: Managing Director Qualifica�ons: MEng Experience and exper�se: Mr Gianmarco Biagi is a former CEO of important mul�na�onal manufacturing groups and General manager of an important Italian group leader in luxury furniture. He has been President of Se�epuntonove Srl since 2018, a holding company of industrial investments in the sector of new technologies, furniture, automo�ve and of services. He holds ins�tu�onal roles as President of AICQ, UMIQ Board President at Confindustria Emilia and Na�onal Councillor at AISOM. Previously he held the posi�on of President of the furniture and wood sector at Unindustria Bologna and of Media Industry President at Unindustria Bologna and President of the EXO consor�um. Other current directorships: N/A Former directorships (last 3 years): N/A Special responsibili�es: N/A Interests in shares: Officine 8k Srl (Director-related en�ty): 327,556,186 Ordinary Shares. Se�epuntonove Srl (Director-related en�ty): 8,000,000 Ordinary Shares. VR Tech SRL (Director-related en�ty): 3,000,000 Ordinary Shares. Interest in op�ons: Nil Name: Mr Gianmarco Orgnoni Title: Execu�ve Director, CSO & CMO Qualifica�ons: BBus Experience and exper�se: Mr Gianmarco Orgnoni has skills extending across corporate finance, investment banking and research analysis. Mr Orgnoni has extensive experience in offering corporate advisory and finance analysis across European and Australian private and publicly listed companies. Mr Orgnoni has worked closely with and has provided adversarial services to several companies spanning civil engineering, educa�on, technology, biotechnology, and real estate. Mr Orgnoni holds a bachelor’s degree in economics and Business Administra�on from the Catholic University of the Sacred Heart of Milan, Italy. Other current directorships: N/A Former directorships (last 3 years): TikForce Limited. Special responsibili�es: N/A Interests in shares: 1,500,000 Ordinary Shares; Torg Advisors (Director related en�ty): 4,500,000 Ordinary Shares. Interest in op�ons: Nil

ANNUAL REPORT FY2023

PAGE 21

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Name:	Mr Jacopo Merli (appointed 30 November 2022)
Title:	Execu�ve Director & COO
Qualifca�ons:	MEng
Experience and exper�se:	Mr Merli is the founder and CEO of JMC Group, acquired by Vec�on Technologies during
	2021. During the last ten years, Mr Merli expanded JMC’s focus as an OEM partner for a
	≈$100b tech hardware giant within mission-cri�cal sectors including military, telco, and
	broadcas�ng, becoming, in 2019, one of their global suppliers. During his university career in
	aerospace engineering, Mr Merli joined as a consultant to the Italian branch of a NASDAQ-
	listed world leader in the design, manufacture and marke�ng of high-performance analog,
	mixed-signal and digital signal processor (“DSP”) and integrated circuits (“ICs”) acquiring key
	knowledge of large company management processes.
Other current directorships:	N/A
Former directorships (last 3 years):	N/A
Special responsibili�es:	N/A
Interests in shares:	66,510,036 ordinary shares and 4,195,611 performance rights
Interest in op�ons:	Nil
Name:	Mr Lorenzo Biagi
Title:	Execu�ve Director & Chief Sales Ofcer
Qualifca�ons:
Experience and exper�se:	Mr Lorenzo Biagi is an experienced company manager in the private sector, with extensive
	knowledge in virtual reality technology, sales, and cost control management. While managing
	corporate development processes for more than 10 years, Mr Biagi has implemented new
	procedures and technologies helping make the companies he worked for and with, leaders
	in innova�on.
Other current directorships:	Nil
Former directorships (last 3 years):	Nil
Special responsibili�es:	N/A
Interests in shares:	Ofcine 8k Srl (Director-related en�ty): 327,556,186 Ordinary Shares.
	Se�epuntonove Srl (Director-related en�ty): 8,000,000 Ordinary Shares.
	VR Tech SRL (Director-related en�ty): 3,000,000 Ordinary Shares.
Interest in op�ons:	Nil
Name:	Mr Gabriele Sorrento - (Resigned on 30 June 2023)
Title:	Non-Execu�ve Director
Qualifca�ons:	M.Arch / M.Eng
Experience and exper�se:	Mr Gabriele Sorrento is the CEO and co-founder of Mindesk, acquired by Vec�on
	Technologies in April 2020. He is passionate about computa�onal design, having obtained a
	master’s degree in architectural engineering at the Polytechnic University of Milan and
	studied entrepreneurship at Santa Clara University as a Fulbright fellow. He has over 13 years
	of experience in 3D CAD, having worked with renowned architectural brands including Renzo
	Piano Building Workshop and Heller Manus Architects. Today Mr Sorrento is part of the AIASF
	Design Technology Commission and is a board member of Vec�on Technologies Limited.
Other current directorships:	Nil
Former directorships (last 3 years):	Nil
Special responsibili�es:	N/A
Interests in shares:	25,125,402 Ordinary Shares
Interest in op�ons:	Nil

INFORMATION ON COMPANY SECRETARY

The Company’s Company Secretary is Mr Derek Hall.

drivers and bringing cost control and process improvement into sharp focus. Mr Hall has been involved as a Chief Financial Officer and Company Secretary for several publicly listed and unlisted companies involving transac�ons in technology, mining, oil and gas and construc�on. Mr Hall is a Chartered Accountant, Chartered Secretary and Fellow of the Financial Services Ins�tute.

ANNUAL REPORT FY2023

PAGE 22

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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MEETINGS OF DIRECTORS

The number of mee�ngs of the board of directors (including board commi�ees) held during the year ended 30 June 2023 and the number of mee�ngs a�ended by each director are set out below:

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Board mee�ngs Eligible to a�end
Directors
Eligible A�ended
Mr Bert Mondello 11 9
Mr Gianmarco Biagi 11 11
Mr Gianmarco Orgnoni 11 11
Mr Jacopo Merli (appointed 1/12/2022) 9 8
Mr Lorenzo Biagi 11 11
Mr Gabriele Sorrento (resigned 30/06/2023) 11 11
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SHARE OPTIONS

Unissued ordinary shares of the Company under op�ons at the date of this report are as follows:

Date op�onsgranted Expirydate Issueprice of shares Number under op�ons	Date op�onsgranted Expirydate Issueprice of shares Number under op�ons	Date op�onsgranted Expirydate Issueprice of shares Number under op�ons	Date op�onsgranted Expirydate Issueprice of shares Number under op�ons
9 October 2020 9 October 2023 $0.112 26,506,452
3 December 2021	3 December 2024	$0.25	32,500,000

The holders of these op�ons do not have any rights under the op�ons to par�cipate in any share issue of the Company or of any other en�ty.

ANNUAL REPORT FY2023

PAGE 23

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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PERFORMANCE RIGHTS

In the prior periods, in rela�on the acquisi�on of JMC Group, the Company issued three tranches of performance rights with various milestones (largely �ed to revenue) for performance in periods up to FY2023. Further details are provided in note 15 of the financial report.

In rela�on the acquisi�on of Blank Canvas Studios (Aus) Pty Ltd, the Company issued 18,000,000 con�ngent considera�on performance rights with various milestones over three tranches (largely �ed to revenue) for performance in periods up to FY2024. Further details are provided in note 15 of the financial report.

REMUNERATION REPORT – AUDITED

The informa�on provided in this remunera�on report has been audited as required by sec�on 308(3C) of the Corpora�ons Act 2001.

The Directors present the Vec�on Technologies’ 2023 remunera�on report, outlining key aspects of our remunera�on policy and framework, and remunera�on awarded this year.

The report is structured as follows:

a. Key management personnel covered in this report.
b. Principles used to determine the nature and amount of remunera�on.
c. Non-execu�ve directors’ remunera�on.
d. Execu�ve director and senior management remunera�on.
e. Details of remunera�on.
a. Key management personnel covered in this report.

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Directors Posi�on
Mr Bert Mondello Non-Execu�ve Chairman
Mr Gianmarco Biagi Managing Director
Mr Gianmarco Orgnoni Execu�ve Director, CSO & CMO
Mr Jacopo Merli (appointed 1/12/2022) Execu�ve Director & COO
Mr Lorenzo Biagi Execu�ve Director
Mr Gabriele Sorrento (resigned 30/06/2023) Non-Execu�ve Director
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b. Principles used to determine the nature and amount of remunera�on.

The Board adheres to the remunera�on policy detailed in the Company’s prospectus issued in December 2016. The remunera�on policy of the Board is designed to ensure that the level and composi�on of remunera�on is compe��ve, reasonable, and appropriate for the results delivered and to a�ract and maintain desirable directors, company secretaries and senior execu�ves.

The Board are mindful that where possible the remunera�on structures reward the achievement of strategic objec�ves to achieve the broader outcome of the crea�on of value for shareholders.

The remunera�on commi�ee is responsible for assessing performance against key performance indicators and determining the short-term incen�ves and long-term incen�ves to be paid. To assist in this assessment, the commi�ee receives detailed reports on performance from management which are based on independently verifiable data such as financial measures, market share and data from independently run surveys.

or defer performance-based remunera�on and may also claw back performance-based remunera�on paid in previous financial years.

To ensure the remunera�on commi�ee is appropriately informed when making remunera�on decisions, the remunera�on commi�ee may seek external advice, as it requires, on remunera�on policies and prac�ces. Remunera�on consultants can be engaged by, and report directly to, the Commi�ee. In selec�ng remunera�on consultants, the Commi�ee would consider poten�al conflicts of interest and independence from the Group’s KMP and any other execu�ves. During the financial year the commi�ee has sought some advice from external remunera�on consultants in rela�on to remunera�on benchmarking, remunera�on strategy and long-term incen�ve plan structures. This did not involve providing the remunera�on commi�ee with any remunera�on recommenda�ons as defined by the Corpora�ons Act 2001.

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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c. Non-execu�ve directors’ remunera�on.

Fees

The Board’s policy is to remunerate non-execu�ve directors at market rates for �me, commitment, and responsibili�es. The Board determines payments to the non-execu�ve directors and reviews their remunera�on annually, based on market prac�ce, du�es, and accountability. Independent external advice is sought when required. In the current year, no advice was sought.

Upon appointment to the Board, all non-execu�ve directors enter into a service agreement with the Company in the form of a le�er of appointment. The le�er summarizes the policies and terms, including compensa�on, relevant to the office of the director.

The key terms of the non-execu�ve director service agreements are as follows:

i. Term of Agreement – ongoing subject to annual review and the Company’s cons�tu�on
ii. Non-Execu�ve Directors’ Fees of up to $72,000 per annum plus an amount equivalent to statutory superannua�on (if applicable)
iii. There is a 6-month no�ce period s�pulated to terminate the contract by either party. The maximum aggregate amount of fees that can be paid to non-execu�ve directors is currently fixed at $300,000 with any change in this amount subject to approval by shareholders at the Annual General Mee�ng. The Company does not have a Director’s Re�rement Scheme in place at present.
d. Execu�ve director and senior management remunera�on.

Service Contracts

It is the Company’s policy that service contracts for execu�ve directors and senior execu�ves be entered into. A service contract with an execu�ve director or senior execu�ve would provide for the payment of benefits where the contract is terminated by the en�ty or the individual.

The execu�ve directors and senior execu�ves would also be en�tled to receive on termina�on of employment their statutory en�tlements of accrued annual and long service leave, together with any superannua�on benefits. An execu�ve director or senior execu�ve would have no en�tlement to termina�on payment in the event of removal for misconduct.

Major provisions of the agreements exis�ng at repor�ng date rela�ng to execu�ve remunera�on are set out below:

Mr Gianmarco Biagi – Managing Director

Term of agreement: Un�l terminated in accordance with the agreement.
Remunera�on: $32,000 per month.
Period of no�ce for termina�on/resigna�on: Three months’ wri�en no�ce by the consultant. Three months wri�en no�ce by the Company.
Details of remunera�on en�tlement on termina�on: Payment of fees up to the date of termina�on or payment of three months’ fees in lieu of no�ce.

Mr Lorenzo Biagi – Execu�ve Director

Term of agreement: Un�l terminated in accordance with the agreement.
Remunera�on: $10,600 per month.
Period of no�ce for termina�on/resigna�on: Three months’ wri�en no�ce by the consultant. Three months’ wri�en no�ce by the Company.
Details of remunera�on en�tlement on termina�on: Payment of fees up to the date of termina�on or payment of three months’ fees in lieu of no�ce.

Mr Gianmarco Orgnoni–Execu�ve Director

Term of agreement: Un�l terminated in accordance with the agreement.
Remunera�on: $18,000 per month.
Period of no�ce for termina�on/resigna�on: Three months’ wri�en no�ce by the consultant. Three months’ wri�en no�ce by the Company.
Details of remunera�on en�tlement on termina�on: Payment of fees up to the date of termina�on or payment of three months’ fees in lieu of no�ce.

ANNUAL REPORT FY2023

PAGE 25

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Service Contracts (cont'd)

Mr Jacopo Merli – Execu�ve Director
Term of agreement: Un�l terminated in accordance with the agreement.
Remunera�on: €64,000 per annum.
Period of no�ce for termina�on/resigna�on: Six months’ wri�en no�ce by the consultant. Three months wri�en no�ce by the Company.
Details of remunera�on en�tlement on termina�on: Payment of fees up to the date of termina�on or payment of three months’ fees in lieu of no�ce.

Share-based payment arrangements rela�ng to key management personnel.

No op�ons were issued to Directors or other key management personnel during the year.

vendors of Vec�on Italy which included the directors Mr Gianmarco Biagi and Mr Lorenzo Biagi. Details of these securi�es are outlined in the tables below.

vendors of Mindesk which included the director Mr Gabriele Sorrento. Details of these securi�es are outlined in the tables below.

e. Details of remunera�on.

are set out in the following tables:

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Short-term
Post-
2023 benefits (paid employment Long-term Share-based payments Propor�on of
or payable as at benefits
benefit remunera�on
30 June 2023) Total
performance
related
Cash, salary & Long service Op�ons/Performance
Name Superannua�on
fees leave Rights
Directors $ $ $ $ $ %
Mr Bert Mondello 72,000 - - 177,251 249,251 71
Mr Gianmarco Biagi 348,000 - - 354,502 702,502 50
Mr Gianmarco Orgnoni 199,500 - - 265,876 465,376 57
Mr Jacopo Merli (appointed
132,643 - - 119,835 252,478 47
1/12/2022)
Mr Lorenzo Biagi 127,200 - - - 127,200 -
Mr Gabriele Sorrento
159,131 - - - 159,131 -
(resigned 30/06/2023)
Total Key Management
1,038,474 - - 917,464 1,955,938 47
Personnel remunera�on
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ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Short-term
Post-
2022 benefits (paid employment Long-term Share-based payments Propor�on of
or payable as at benefits remunera�on
benefits Total
30 June 2022) performance
Cash, salary & Long service Op�ons/Performance related
Name Superannua�on
fees leave Rights
Directors $ $ $ $ $ %
Mr Bert Mondello 72,000 - - 64,151 136,151 47%
Mr Gianmarco Biagi 205,000 - - 128,302 333,302 38%
Mr Gianmarco Orgnoni 152,125 - - 96,226 248,351 39%
Mr Jacopo Merli (appointed
1/12/2022) - - - - - -
Mr Lorenzo Biagi 127,200 - - - 127,200 -
Mr Gabriele Sorrento
149,535 - - - 149,535 -
(resigned 30/06/2023)
Total Key Management
705,860 - - 288,679 994,539 29%
Personnel remunera�on
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ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Other transac�ons with key management personnel.

i. Transac�ons with directors and key management personnel.

The Group may enter into agreements for services rendered with individuals (or an en�ty that is associated with the individuals) during the ordinary course of business.

A number of en��es associated with the directors and key management personnel have consul�ng agreements in place which has resulted in transac�ons between the Group and those en��es during the period. The terms and condi�ons of those transac�ons were no more favourable than those available, or which might reasonably be expected to be available, on similar transac�ons to unrelated en��es on an arm’s length basis.

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Transac�on Value Outstanding Balance
Director Transac�on 2023 2022 2023 2022
Mr Gianmarco Biagi & Mr Other revenue (a) 23,726 7,764 - 3,391
Lorenzo Biagi Other service cost (b) 33,872 36,003 136 2,818
Revenue from services (c) 1,483 8,700 159,511 78,688
Mr Jacopo Merli Other service cost (d) 231.800 - 91.048 -
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(a) The Company’s subsidiary Vec�on Italy Srl received services from companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi.
(b) The Company’s subsidiary Vec�on Italy Srl paid to companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi for service provided.
(c) The Company’s subsidiary Vec�on Italy Srl received services from companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi for service provided.
(d) The Company's subsidiaries paid to acquire services to companies and individual associated with Mr Jacopo Merli.

In addi�on, each of the directors received director’s fees in accordance with the terms of their respec�ve contracts.

ii. Loans to directors.

Loan amounted to $153,791 was provided to Mr Jacopo Merli. This loan is fully repayable at an interest rate of 5%. The loan is to be repaid by 30 June 2024.

Equity instrument disclosures rela�ng to key management personnel.

i. Shareholding.

management personnel of the Group, including their personally related par�es, are set out below:

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2023 Balance at the start of Received during the Other changes Balance at the end of
the year year on exercise of during the year the year or date of
performance rights resigna�on (if
applicable)
Ordinary Shares
Directors
Mr Bert Mondello 5,500,000 - - 5,500,000
Mr Gianmarco Biagi [1] 169,278,093 - - 169,278,093
Mr Lorenzo Biagi [1] 169,278,093 - - 169,278,093
Mr Gianmarco Orgnoni 6,000,000 - - 6,000,000
Mr Jacopo Merli (appointed - 377,791 66,132,245 66,510,036
1/12/2022) [2]
Mr Gabriele Sorrento (resigned 22,257,873 - 2,867,529 25,125,402
30/06/2023)
Total 372,314,059 377,791 68,999,774 441,691,624
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ANNUAL REPORT FY2023

PAGE 28

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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1 holder of these securi�es

2 Shareholding as at date of appointment.

ii. Op�on holdings.

During the year, no op�ons were issued to key management personnel.

iii. Performance-based remunera�on.

No performance-based securi�es were issued, and no other bonuses were paid, to key management personnel during the repor�ng period.

iv. Shares provided on the exercise of remunera�on op�ons.

During the repor�ng period, no shares were issued to key management personnel on the exercise of op�ons previously granted as remunera�on.

v. Loans to key management persons.

Loan amounted to $153,791 was provided to Mr Jacopo Merli. This loan is fully repayable at an interest rate of 5%. The loan is to be repaid by 30 June 2024.

vi. Use of remunera�on consultants.

The Company has not engaged the services of remunera�on consultants to review its execu�ve remunera�on recommenda�ons.

vii. Company performance.

The following table shows key performance indicators for the Group:

	2023	2022	2021	2020
	$	$	$	$
Loss for theyear	(11,022,802)	(7,100,433)	(2,506,889)	(1,165,870)
Closingshareprice	0.042	0.07	0.06	0.04
Basic and diluted lossper share	(2.443)	(0.61)	(0.26)	(0.203)

Vo�ng and comments made at the company's 2022 Annual General Mee�ng.

any specific feedback at the AGM or throughout the year on its remunera�on prac�ces.

END OF AUDITED REMUNERATION REPORT

ANNUAL REPORT FY2023

PAGE 29

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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INSURANCE OF OFFICERS

The Company has entered into a deed of access, indemnity and insurance with each of its current and former directors, and the Company Secretary. Under the terms of the deed, the Company indemnifies the officer or former officer, to the extent by law, for the liabili�es incurred as an officer of the Company.

and officers of the Company against liabili�es incurred by them to the extent permi�ed by the Corpora�ons Act 2001. The contracts prohibit disclosure of the nature of the liability cover and the amount of the premium.

INDEMNITY AND INSURANCE OF AUDITOR

related en�ty against a liability incurred by the auditor.

NON-AUDIT SERVICES

Taxa�on services were provided by the Company’s auditor, RSM Australia Partners. Details of the amounts paid or payable for non-audit

CONFIRMATION UNDER ASX LISTING RULE 4.10.19

cash and assets in a form readily conver�ble to cash, that it had at the �me of admission, in a way consistent with its business objec�ves.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied to the Court under sec�on 237 of the Corpora�ons Act 2001 for leave to bring proceedings on behalf of the Company, or to intervene in any proceedings to which the Company is a party, for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under sec�on 237 of the Corpora�ons Act 2001.

AUDITOR’S INDEPENDENCE DECLARATION

Sec�on 307C of the Corpora�ons Act 2001 requires our auditors, RSM Australia Partners, to provide the directors of the Company with an Independence Declara�on in rela�on to the review of the annual financial report. This Independence Declara�on is set out on page 31 and forms part of this Directors’ Report for the year ended 30 June 2023.

This report is signed in accordance with a resolu�on of the Board of Directors made pursuant to sec�on 306(3) of the Corpora�ons Act 2001.

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Mr Bert Mondello Chairman

Perth, Western Australia 29 September 2023

ANNUAL REPORT FY2023

PAGE 30

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of Vection Technologies Limited for the year ended 30 June 2023, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

(i) The auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) Any applicable code of professional conduct in relation to the audit.

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RSM AUSTRALIA PARTNERS

==> picture [107 x 49] intentionally omitted <==

Perth, WA Dated: 29 September 2023

MATTHEW BEEVERS Partner

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Revenue	Consolidated
	30 June 2023 Notes $ 2(i) 25,331,634 2(i) 967,688 6,721 563,891 18,716,294 5,820,285 2,064,764 2(ii) 342,097 2(iii) 1,217,307 2(vi) 3,205,156 2(iv) 3,470,736 2(v) 1,859,878 37,267,129 (10,967,807)) 3 54,995 (11,022,802) (11,022,802) 389,052 389,052 (10,633,750) (202,330) (10,820,472) 18 (2.443) 18 (2.443)	30 June 2022
		$ 17,217,685
Other income		1,676,248
Expenses Acquisi�on costs Changes in inventories Variable cost of sales Employee beneft expense Consul�ng and professional fees Finance costs Deprecia�on and amor�sa�on Impairment expenses Other expenses Share basedpayments		21,387 (84,831) 11,538,376 4,840,441 3,007,095 94,245 957,899 953,946 2,605,726 1,892,269
Total expenses		25,826,553
Loss before income tax expense		(6,932,620)
Income tax expense		167,813
Loss a�er income tax expense a�ributable to equityholders		(7,100,433)
Loss a�er income tax a�ributable to equity holders of Vec�on Technologies limited		(7,100,433)
Other comprehensive income/(loss) Items that may be reclassifed to proft or loss: Exchange diferences on transla�on of foreign opera�ons		(429,072)
Total comprehensive income/(loss)for theperiod		(429,072)
Total comprehensive loss a�ributable to equity holders of Vec�on Technologies Limited		(7,529,505)
Loss for the year is a�ributable to: Non-controlling interest Member of Vec�on Technologies Limited Earnings per share for lossa�ributable to the members of Vec�on Technologies Limited Overall basic loss per share Overall diluted loss per share		(418,946) (6,681,487) (0.624) (0.624)

notes.

ANNUAL REPORT FY2023

PAGE 32

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Current assets Cash and cash equivalents Receivables Inventories	Consolidated
	30 June 2023 30 June 2022 Notes $ $ 4 11,359,203 14,869,095 5 13,647,471 6,208,213 6 676,216 1,341,231
Total current assets	25,682,890 22,418,539
Non-current assets Property, plant & equipment Right-of-use assets Intangible assets Financial assets	7 550,136 292,577 8 321,660 424,079 9 15,463,298 17,027,998 25 84,179 40,526
Total non-current assets	16,419,273 17,785,180
Total assets	42,102,163 40,203,719
Current liabili�es Trade and other payables Employee benefts Current tax liabili�es Lease liabili�es Borrowings	10 10,968,770 6,973,912 11 72,265 78,250 15,823 29,836 12 211,396 194,613 13 8,113,959 1,198,728
Total Current Liabili�es	19,382,213 8,475,339
Non-currentliabili�es Employee benefts Deferred tax liabili�es Lease liabili�es Borrowings	11 544,316 433,455 3 626,665 615,930 12 164,579 286,293 13 2,193,683 2,415,293
Total Non-Current Liabili�es	3,529,243 3,750,971
TotalLiabili�es	22,911,456 12,226,310

Net assets	19,190,707 27,977,409
Equity Issued capital Reserves Accumulated losses	14 46,591,700 44,611,306 15 7,221,042 11,081,001 16 (34,622,035) (27,714,898)
Equity a�ributable to the members of Vec�on Technologies Limited Non-ControllingInterest	19,190,707 27,977,409 19,902,087 28,456,623 17 (711,380) (479,214)
Total Equity	19,190,707 27,977,409

ANNUAL REPORT FY2023

PAGE 33

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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CONSOLIDATED STATEMENT OF CASH FLOWS

CONSOLIDATED STATEMENT OF CASH FLOWS
Cash fows from opera�ng ac�vi�es Receipts from customers Payments to suppliers and employees Interest received Interest paid / fnance costs Taxpaid(net of R&D tax refund)	Consolidated
	30 June 2023 30 June 2022 Notes $ $ 19,865,612 17,603,134 (27,257,113) (18,694,672) 211,531 44,026 (239,994) (94,245) (58,273) (104,319)
Net cash ou�low from opera�ngac�vi�es	4 (7,478,237) (1,246,076)
Cash fows from inves�ng ac�vi�es Purchase of plant and equipment Transac�on costs in purchase of subsidiary Payment for intangible assets	(403,444) (163,957) (6,721) (21,387) (2,677,447) (1,838,469)
Net cashou�low infow from inves�ngac�vi�es	(3,087,612) (2,023,813)
Cash fow from fnancing ac�vi�es Proceeds from issues of fully paid shares Payment of transac�on costs Repayment of lease liabili�es Repayment of borrowings Proceeds from borrowings	14 - 12,951,277 14 - (824,686) (2,512) (79,881) (2,563,475) (759,838) 9,257,096 151,583
Net cashinfow from fnancingac�vi�es	6,505,652 11,438,455
Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the fnancial year Efect of movement in exchange rates on cash held	(3,874,740) 8,168,566 14,869,095 7,083,890 364,848 (383,361)
Cash and cash equivalents at the end of the fnancialyear	4 11,359,203 14,869,095

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Consolidated
	Notes Issued capital Accumulated losses Reserves Foreign currency transla�on reserve Non- controlling interest Total
	$ $ $ $ $ $
Balance at 1 July2022	44,611,306 (27,335,684) 11,783,771 (602,770) (479,214) 27,977,409

Loss for the period	- (10,820,472) - - (202,330) (11,022,802)
Other comprehensive loss	- - - 389,052 - 389,052
Total comprehensive loss for theperiod	- (10,820,472) - 389,052 (202,330) (10,633,750)

Transac�ons with owners in their capacity as owners
Share issue in lieu of salary	14 125,806 - - - - 125,806
Share based payments	15 - - 1,734,073 - - 1,734,073
Performance rights vested	15 1,854,588 - (1,854,588) - - -
Performance rights expired	15 4,215,665 (4,228,496) (12,831)
De-recogni�on of non- controllinginterest	- 29,837 - - (29,837) -
Balance at 30 June 2023	46,591,700 (33,910,654) 7,434,760 (213,718) (711,381) 19,190,707

Balance at 1 July2021	27,502,218 (20,654,197) 8,870,499 (173,575) (117,218) 15,427,727
Loss for the period Other comprehensive loss	- (6,681,487) - - (418,946) (7,100,433) - - - (429,072) - (429,072)
Total comprehensive loss for theperiod	- (6,681,487) - (429,072) (418,946) (7,529,505)
Transac�ons with owners in their capacity as owners Contribu�on of equity, net of transac�on costs Share based payments Acquisi�on of subsidiaries with non-controllinginterest	14 17,109,088 - - - - 17,109,088 15 - - 2,893,830 - - 2,893,830 - - 19,441 (123) 56,950 76,269
Balance at 30 June 2022	44,611,306 (27,335,684) 11,738,771 (602,770) (479,214) 27,977,409

ANNUAL REPORT FY2023

PAGE 35

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

ended 30 June 2023 was authorised for issue in accordance with a resolu�on of directors on in September 2023.

The Company is a public company limited by shares incorporated on 14 September 2016 and domiciled in Australia. The nature of the opera�ons and principal ac�vi�es of the Company are described in the Directors’ report.

a. Basis of prepara�on.

been applied consistently to all periods presented unless otherwise stated.

i. Statement of compliance.

with the Australian Accoun�ng Standards (“AASBs”), including Australian Accoun�ng Interpreta�ons, other authorita�ve pronouncements of the Australian Accoun�ng Standards Board and the Corpora�ons Act 2001, as appropriate for for-profit oriented en��es. This financial report also complies with Interna�onal Financial Repor�ng Standards as issued by the Interna�onal Accoun�ng Standards Boards (“IASB”).

ii. Basis of measurement and repor�ng conven�on.

b. Segment informa�on.

Opera�ng Segments – AASB 8 requires a management approach under which segment informa�on is presented on the same basis as that used for internal repor�ng purposes. This is consistent to the approach used for the compara�ve period. Opera�ng segments are reported in a uniform manner to which is internally provided to the chief opera�ng decision maker. The chief opera�ng decision maker has been

An opera�ng segment is a component of the Group that engages in business ac�vity from which it may earn revenues or incur expenditure, including those that relate to transac�ons with other Group components. Each opera�ng segment’s results are reviewed regularly by the Board to make decisions about resources to be allocated to the segments and assess its performance, and for which discrete financial informa�on is available.

The Board monitors the opera�ons of the Group based on: IT so�ware development & sales division and services division.

strategic decision-making is facilitated by evalua�on of the opera�ons of the legal parent and subsidiaries which represent the opera�onal performance of the Group’s revenues and the research and development ac�vi�es as well as the finance, treasury, compliance, and funding elements of the Group.

c. Parent en�ty informa�on.

the parent en�ty is disclosed in note 24.

d. Cri�cal accoun�ng es�mates and judgements.

equal the actual results. This note provides an overview of the areas that involve a degree of judgement or complexity in the preparing the annual financial report. Facts and circumstances may come to light a�er the event which may have significantly varied the assessment used which result in a materially different value being recorded at the �me of preparing this annual financial report.

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Share-based payments : The Group measures the cost of equity-se�led transac�ons by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black- Scholes model taking into account the terms and condi�ons upon which the instruments were granted. The accoun�ng es�mates and assump�ons rela�ng to equity-se�led share-based payments would have no impact on the carrying amounts of assets and liabili�es within the next annual repor�ng period but may impact profit or loss and equity. Refer to notes [15] and [16] for details of inputs u�lised in calcula�ng the fair value of the equity instrument.

Es�ma�on of useful lives of assets : The Group determines the es�mated useful lives and related deprecia�on and amor�sa�on charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innova�ons or some other event. The deprecia�on and amor�sa�on charge will increase where the useful lives are less than previously es�mated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be wri�en off or wri�en down.

: The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accoun�ng policy stated in note [1(s)]. The recoverable amounts of cash-genera�ng units have been determined based on value-in-use calcula�ons. These calcula�ons require the use of assump�ons, including es�mated pre-tax discount rates based on the current cost of capital and growth rates of the es�mated future cash flows.

Allowance for expected credit losses : The allowance for expected credit loss assessment requires a degree of es�ma�on and judgement. It is based on the life�me expected credit loss, grouped based on days overdue, and makes assump�ons to allocate an overall expected credit loss rate for each group. These assump�ons include recent sales experience, historical collec�on rates, and forward-looking informa�on that is available. The allowance for expected credit losses, as disclosed in note [5], is calculated based on the informa�on available at the �me of prepara�on. The actual credit losses in future years may be higher or lower.

Provision for impairment of inventories : The provision for impairment of inventories assessment requires a degree of es�ma�on and judgement. The level of the provision is assessed by taking into account the recent sales experience, the ageing of inventories and other factors that affect inventory obsolescence.

e. Principles of consolida�on.

Subsidiaries.

Subsidiaries are all en��es (including structured en��es) over which the Group has control. The Group controls an en�ty when the Group is exposed to or has rights to, variable returns from its involvement with the en�ty and has the ability to affect those returns through its power to direct the ac�vi�es of the en�ty. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

Intercompany transac�ons, balances, and unrealised gains on transac�ons between Group companies are eliminated. Unrealised losses are also eliminated unless the transac�on provides evidence of an impairment of the transferred asset. Accoun�ng policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

f. Discon�nued opera�ons.

major line of business or geographical area of opera�ons, is part of a single co-ordinated plan to dispose of such a line of business or area of opera�ons, or is a subsidiary acquired exclusively with a view to resale. The results of discon�nued opera�ons are presented separately on the face of the statement of profit or loss and other comprehensive income.

g. Standards and Interpreta�ons applicable to 30 June 2023.

In the year ended 30 June 2023, the directors have reviewed all the new and revised Standards and Interpreta�ons issued by the AASB that are relevant to the Group and effec�ve for the current annual repor�ng period. As a result of this review, the directors have determined that there is no material impact of the new and revised Standards and Interpreta�ons on the Group and, therefore, no material change is necessary to the Group’s accoun�ng policies.

h. Standards and Interpreta�ons in issue not yet mandatory or early adopted.

The directors have also reviewed all Standards and Interpreta�ons in issue but not yet mandatory or early adopted for the year ended 30 June 2023. These standards are not expected to have a material impact on the Group in the current annual repor�ng period.

i. Cash and cash equivalents.

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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at call with financial ins�tu�ons, other short-term, highly liquid investments with original maturi�es of three months or less that are readily conver�ble to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdra�s. Bank overdra�s are shown within borrowings in current liabili�es in the consolidated statement of financial posi�on.

j. Trade and other receivables.

provision for impairment.

the carrying amount directly. An allowance account (credit loss allowance) is used when there is objec�ve evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficul�es of the debtor, the probability that the debtor will enter bankruptcy or financial reorganisa�on, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of es�mated future cash flows, discounted at the original effec�ve interest rate. Cash flows rela�ng to short-term receivables are not discounted if the effect of discoun�ng is immaterial.

allowance had been recognised becomes uncollec�ble in a subsequent period, it is wri�en off against the allowance. Subsequent recoveries of amounts previously wri�en off are credited against other expenses in profit or loss.

k. Inventories.

comprises of direct materials and delivery costs, direct labour, import du�es and other taxes, and an appropriate propor�on of variable and fixed overhead expenditure based on normal opera�ng capacity.

l. Trade and other payables.

amounts are unsecured and are usually paid within 30 days of recogni�on. Trade and other payables are presented as current liabili�es unless payment is not due within 12 months a�er the repor�ng period. They are recognised ini�ally at their fair value and subsequently measured at amor�sed cost using the effec�ve interest method.

m. Property, plant, and equipment.

All property, plant and equipment are stated at historical cost less deprecia�on. Historical cost includes expenditure that is directly a�ributable to the acquisi�on of the items. Cost may also include transfers from equity of any gains or losses on qualifying cash flow hedges of foreign currency purchases of property, plant, and equipment.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the repor�ng period in which they are incurred.

Increases in the carrying amounts arising on revalua�on of land and buildings are recognised, net of tax, in other comprehensive income and accumulated in reserves in shareholders’ equity. To the extent that the increase reverses a decrease previously recognised in profit or loss, the increase is first recognised in profit or loss. Decreases that reverse previous increases of the same asset are first recognised in other comprehensive income to the extent of the remaining surplus a�ributable to the asset; all other decreases are charged to profit or loss. Each year, the difference between deprecia�on based on the revalued carrying amount of the asset charged to profit or loss and deprecia�on based on the asset’s original cost, net of tax, is reclassified from the property, plant, and equipment revalua�on surplus to retained earnings.

Land is not depreciated. Deprecia�on on other assets is calculated using the methods shown in the table below to allocate their cost or revalued amounts, net of their residual values, over their es�mated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term.

The deprecia�on rates used for each class of depreciable assets are as follows:

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Class of fxed assets	Deprecia�on method	Deprecia�on rate
Ofce and computer equipment	Diminishingvalue	20% - 67%
Leasehold improvements	Straight-line	2.5%
So�ware development	Straight-line	4% - 25%

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end of each repor�ng period.

An asset’s carrying amount is wri�en down immediately to its recoverable amount if the asset’s carrying amount is greater than its es�mated recoverable amount.

revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of those assets to retained earnings.

n. Contributed equity.

a deduc�on, net of tax, from the proceeds.

Where any group company purchases the Company’s equity instruments, for example as the result of a share buy-back or a share-based payment plan, the considera�on paid, including any directly a�ributable incremental costs (net of income taxes) is deducted from equity a�ributable to the owners of Vec�on Technologies Limited as treasury shares un�l the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any considera�on received, net of any directly a�ributable incremental transac�on costs and the related income tax effects, is included in equity a�ributable to the owners of the Group.

o. Dividends.

Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discre�on of the en�ty, on or before the end of the repor�ng period but not distributed at the end of the repor�ng period.

p. Earnings per share.
i. Basic earnings per share.

Basic earnings per share is calculated by dividing:

shares issued during the year and excluding treasury shares.

ii. Diluted earnings per share.

the weighted average number of addi�onal ordinary shares that would have been outstanding assuming the conversion of all dilu�ve poten�al ordinary shares.
q. Income taxes.

for each jurisdic�on, adjusted by changes in deferred tax assets and liabili�es a�ributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

or liabili�es are se�led, based on those tax rates that are enacted or substan�vely enacted, except for:

When the deferred income tax asset or liability arises from the ini�al recogni�on of goodwill or an asset or liability in a transac�on that is not a business combina�on and that, at the �me of the transac�on, affects neither the accoun�ng nor taxable profits; or

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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reversal can be controlled, and it is probable that the temporary difference will not reverse in the foreseeable future.

amounts will be available to u�lise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each repor�ng date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

liabili�es and deferred tax assets against deferred tax liabili�es, and they relate to the same taxable authority on either the same taxable en�ty or different taxable en�ty's which intend to se�le simultaneously.

r. Provisions.

Provisions for legal claims, service warran�es and make good obliga�ons are recognised when the Group has a present legal or construc�ve obliga�on as a result of past events, it is probable that an ou�low of resources will be required to se�le the obliga�on and the amount has been reliably es�mated. Provisions are not recognised for future opera�ng losses.

Provisions are measured at the present value of management’s best es�mate of the expenditure required to se�le the present obliga�on at the end of the repor�ng period. The discount rate used to determine the present value is a pre-tax rate that reflects current market assessments of the �me value of money and the risks specific to the liability. The increase in the provision due to the passage of �me is recognised as interest expense.

s. Intangible assets.

Intangible assets acquired as part of a business combina�on, other than goodwill, are ini�ally measured at their fair value at the date of the acquisi�on. Intangible assets acquired separately are ini�ally recognised at cost. Indefinite life intangible assets are not amor�sed and are subsequently measured at cost less any impairment. The intellectual property acquired as part of the Vec�on Italy business combina�on have been treated as indefinite life intangible assets as they are expected to contribute to the Group’s cash flows for the foreseeable future. Finite life intangible assets are subsequently measured at cost, less amor�sa�on, and any impairment. The gains or losses recognised in profit or loss arising from the derecogni�on of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pa�ern of consump�on or useful life are accounted for prospec�vely by changing the amor�sa�on method or period.

Goodwill.

Goodwill arises on the acquisi�on of a business. Goodwill is not amor�sed. Instead, goodwill is tested annually for impairment, or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Impairment losses on goodwill are taken to profit or loss and are not subsequently reversed.

So�ware Patents and development costs.

i. Research and development.

Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated en�ty is able to use or sell the asset; the consolidated en�ty has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised development costs are amor�sed on a straight-line basis over the period of their expected benefit.

ii. Patents and trademarks.

iii. So�ware.

ANNUAL REPORT FY2023

PAGE 40

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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The amor�sa�on rates used for each class of depreciable intangible assets are as follows:

Class of fxed assets Deprecia�on method Deprecia�on rate	Class of fxed assets Deprecia�on method Deprecia�on rate	Class of fxed assets Deprecia�on method Deprecia�on rate
Rights of use of intangible so�ware Straight-line 20%
Other intangible assets (so�ware, patents and development costs)	Straight-line	20% to 50%

t. Foreign currency transla�on.
i. Func�onal and presenta�on currency.

environment in which the en�ty operates (‘the func�onal currency’). The consolidated financial statements are presented in Australian dollar ($), which is Vec�on Technologies Limited’s func�onal and presenta�on currency.

ii. Transac�ons and balances.

Foreign currency transac�ons are translated into the func�onal currency using the exchange rates at the dates of the transac�ons. Foreign exchange gains and losses resul�ng from the se�lement of such transac�ons and from the transla�on of monetary assets and liabili�es denominated in foreign currencies at year end exchange rates are generally recognised in profit or loss. They are deferred in equity if they relate to qualifying cash flow hedges and qualifying net investment hedges or are a�ributable to part of the net investment in a foreign opera�on.

comprehensive income, within finance costs.

on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Transla�on differences on assets and liabili�es carried at fair value are reported as part of the fair value gain or loss. For example, transla�on differences on non-monetary assets and liabili�es such as equi�es held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and transla�on differences on non-monetary assets such as equi�es classified as available-for-sale financial assets are recognised in other comprehensive income.

iii. Group companies.

func�onal currency different from the presenta�on currency are translated into the presenta�on currency as follows:

assets and liabili�es for each Statement of Financial Posi�on presented are translated at the closing rate at the date of that Statement of Financial Posi�on.
(unless this is not a reasonable approxima�on of the cumula�ve effect of the rates prevailing on the transac�on dates, in which case income and expenses are translated at the dates of the transac�ons), and all resul�ng exchange differences are recognised in other comprehensive income.

financial instruments designated as hedges of such investments, are recognised in other comprehensive income. When a foreign opera�on is sold or any borrowings forming part of the net investment are repaid, the associated exchange differences are reclassified to profit or loss, as part of the gain or loss on sale where applicable.

u.

if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less the costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately iden�fiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-genera�ng units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each repor�ng period.

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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v. Revenue recogni�on.

Revenue from contracts with customers.

goods or services to a customer. For each contract with a customer, the group iden�fies the contract with a customer; iden�fies the performance obliga�ons in the contract; determines the transac�on price which takes into account es�mates of variable considera�on and the �me value of money; allocates the transac�on price to the separate performance obliga�ons on the basis of the rela�ve stand-alone selling price of each dis�nct good or service to be delivered; and recognises revenue when or as each performance obliga�on is sa�sfied in a manner that depicts the transfer to the customer of the goods or services promised.

refunds, any poten�al bonuses receivable from the customer and any other con�ngent events. Such es�mates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable considera�on is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumula�ve revenue recognised will not occur. The measurement constraint con�nues un�l the uncertainty associated with the variable considera�on is subsequently resolved. Amounts received that are subject to the constraining principle are ini�ally recognised as deferred revenue in the form of a separate refund liability.

Interest.

Other income.

Other income is recognised when it is received or when the right to receive payment is established.

Government grants.

that they are intended to compensate.

All revenue is stated net of the amount of goods and services tax (GST).

w. Leases.

on a present-value basis. Lease liabili�es include the net present value of the following lease payments:

variable lease payments that are based on an index or a rate, ini�ally measured using the index or rate as at the commencement date;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase op�on if the Group is reasonably certain to exercise that op�on; and

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, security, and condi�ons.

produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Right-of-use assets are measured at cost comprising the following:

the amount of the ini�al measurement of lease liability;
any lease payments made at or before the commencement date less any lease incen�ves received;
any ini�al direct costs; and
restora�on costs.

ANNUAL REPORT FY2023

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ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the Group is reasonably certain to exercise a purchase op�on, the right-of-use asset is depreciated over the underlying asset’s useful life. While the Group revalues its land and buildings that are presented within property, plant and equipment, it has chosen not to do so for the right-ofuse buildings held by the Group.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less without a purchase op�on. Lowvalue assets comprise IT equipment and small items of office furniture.

x.

i. Short-term obliga�ons.

wholly within 12 months a�er the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the repor�ng period and are measured at the amounts expected to be paid when the liabili�es are se�led. The liabili�es for annual leave and accumula�ng sick leave are presented as employee provisions in the consolidated statement of financial posi�on while all other short-term employee obliga�ons are presented as payables in the consolidated Statement of financial posi�on.

ii.

The liabili�es for long service leave and annual leave are not expected to be se�led wholly within 12 months a�er the end of the period in which the employees render the related service. They are therefore measured as the present value of expected future payments to be made in respect of services provided by employees up to the end of the repor�ng period using the projected unit credit method. Considera�on is given to expected future wage and salary levels, experience of employee departures and periods of service.

Expected future payments are discounted using market yields at the end of the repor�ng period of high-quality corporate bonds with terms and currencies that match, as closely as possible, the es�mated future cash ou�lows.

Obliga�ons are presented as current in the Statement of Financial Posi�on if the en�ty does not have an uncondi�onal right to defer se�lement for at least twelve months a�er the repor�ng period, regardless of when the actual se�lement is expected to occur.

iii.

All Australian-resident employees of the Group are en�tled to receive a superannua�on guarantee contribu�on required by the government, which is currently 10.5%, and do not receive any other re�rement benefits. Some individuals have chosen to sacrifice part of their salary to increase payments towards superannua�on.

benefit funds in other jurisdic�ons.

iv.

accepts voluntary redundancy in exchange for these benefits.

those benefits; and (b) when the en�ty recognises costs for a restructuring that is within the scope of AASB 137 Provisions, Con�ngent Liabili�es and Con�ngent Assets and involves the payment of termina�ons benefits.

expected to accept the offer. Benefits falling due more than 12 months a�er the end of the repor�ng period are discounted to present value.

v. Share based payments.

ANNUAL REPORT FY2023

PAGE 43

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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shares, or op�ons over shares, that are provided to employees in exchange for the rendering of services. Cash-se�led transac�ons are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-se�led transac�ons is measured at fair value on the grant date. Fair value is independently determined using either the Binomial or Black- Scholes op�on pricing model that takes into account the exercise price, the term of the op�on, the impact of dilu�on, the share price at the grant date and the expected price vola�lity of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the op�on, together with non-ves�ng condi�ons that do not determine whether the consolidated en�ty receives the services that en�tle the employees to receive payment. No account is taken of any other ves�ng condi�ons.

The cost of equity-se�led transac�ons is recognised as an expense with a corresponding increase in equity over the ves�ng period. The cumula�ve charge to profit or loss is calculated based on the grant date fair value of the award, the best es�mate of the number of awards that are likely to vest and the expired por�on of the ves�ng period. The amount recognised in profit or loss for the period is the cumula�ve amount calculated at each repor�ng date less amounts already recognised in previous periods.

The cost of cash-se�led transac�ons is ini�ally, and at each repor�ng date un�l vested, determined by applying either the Binomial or BlackScholes op�on pricing model, taking into considera�on the terms and condi�ons on which the award was granted. The cumula�ve charge to profit or loss un�l se�lement of the liability is calculated as follows:

during the ves�ng period, the liability at each repor�ng date is the fair value of the award at that date mul�plied by the expired por�on of the ves�ng period.
from the end of the ves�ng period un�l the se�lement of the award, the liability is the full fair value of the liability at the repor�ng date.

Market condi�ons are taken into considera�on in determining fair value. Therefore, any awards subject to market condi�ons are considered to vest irrespec�ve of whether or not that market condi�on has been met, provided all other condi�ons are sa�sfied.

expense is recognised, over the remaining ves�ng period, for any modifica�on that increases the total fair value of the share-based compensa�on benefit as at the date of modifica�on.

If the non-ves�ng condi�on is within the control of the Group or employee, the failure to sa�sfy the condi�on is treated as a cancella�on. If the condi�on is not within the control of the Group or employee and is not sa�sfied during the ves�ng period, any remaining expense for the award is recognised over the remaining ves�ng period, unless the award is forfeited.

If equity-se�led awards are cancelled, it is treated as if it has vested on the date of cancella�on, and any remaining expense is recognised immediately. If a new replacement award is subs�tuted for the cancelled award, the cancelled and new award is treated as if they were a

y. Goods and Services Tax (GST).

Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the taxa�on authority. In this case, it is recognised as part of the cost of acquisi�on of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxa�on authority is included with other receivables or payables in the consolidated statement of financial posi�on.

recoverable from, or payable to the taxa�on authority, are presented as opera�ng cash flows.

Commitments and con�ngencies are disclosed net of the amount of GST recoverable from, or payable to, the taxa�on authority.

z. Compound Financial Instruments.

of the holder when the number of shares to be issued is fixed. The liability component of a compound financial instrument is recognised ini�ally at the fair value of a similar liability that does not have an equity conversion op�on. The equity component is recognised ini�ally at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly a�ributable transac�on costs are allocated to the liability and equity components in propor�on to their ini�al carrying amounts.

ANNUAL REPORT FY2023

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effec�ve interest method. The equity component of a compound financial instrument is not remeasured subsequent to ini�al recogni�on. Interest related to the financial liability is recognised in the consolidated statement of profit or loss and other comprehensive income. On conversion the financial liability is reclassified to equity and no gain or loss is recognised.

aa. Financial instruments.

i.

Financial assets recognised by the Group are subsequently measured in their en�rety at either amor�sed cost or fair value, subject to their classifica�on and whether the Group irrevocably designates the financial asset on ini�al recogni�on at fair value through other comprehensive income (FVTOCI) in accordance with the relevant criteria in AASB 9.

liabili�es designated at fair value through profit and loss (FVTPL), are subsequently measured at fair value.

ii. Ini�al recogni�on and measurement.

financial assets, this is equivalent to the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accoun�ng is adopted).

through profit or loss, in which case transac�on costs are immediately recognised as expenses in profit or loss.

Trade and other receivables

Trade and other receivables arise from the Group’s transac�ons with its customers and are normally se�led within 30 days.

assets, trade and other receivables are subsequently measured at amor�sed cost.

iii. Impairment.

a. debt instruments measured at amor�sed cost;
b.
c. receivables from contracts with customers and contract assets.

customers and contract assets. Under the AASB 9 simplified approach, the Group determines the allowance for credit losses for receivables from contracts with customers and contract assets on the basis of the life�me expected credit losses of the financial asset. Life�me expected credit losses represent the expected credit losses that are expected to result from default events over the expected life of the financial asset.

to the financial asset as well as current and future expected economic condi�ons relevant to the financial asset. When material, the �me value of money is incorporated into the measurement of expected credit losses. There has been no change in the es�ma�on techniques or significant assump�ons made during the repor�ng period.

losses.

bb. Business Combina�ons.

The acquisi�on method of accoun�ng is used to account for business combina�ons regardless of whether equity instruments or other assets are acquired.

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The considera�on transferred is the sum of the acquisi�on-date fair values of the assets transferred, equity instruments issued, or liabili�es incurred by the acquirer to former owners of the acquiree and the amount of any non-controlling interest in the acquiree. For each business combina�on, the non-controlling interest in the acquiree is measured at either fair value or at the propor�onate share of the acquiree's iden�fiable net assets. All acquisi�on costs are expensed as incurred to profit or loss.

classifica�on and designa�on in accordance with the contractual terms, economic condi�ons, the consolidated en�ty's opera�ng or accoun�ng policies and other per�nent condi�ons in existence at the acquisi�on date.

Where the business combina�on is achieved in stages, the consolidated en�ty remeasures its previously held equity interest in the acquiree at the acquisi�on-date fair value and the difference between the fair value and the previous carrying amount is recognised in profit or loss.

Con�ngent considera�on to be transferred by the acquirer is recognised at the acquisi�on-date fair value. Subsequent changes in the fair value of the con�ngent considera�on classified as an asset or liability is recognised in profit or loss. Con�ngent considera�on classified as equity is not remeasured and its subsequent se�lement is accounted for within equity.

and the fair value of the considera�on transferred and the fair value of any pre-exis�ng investment in the acquiree is recognised as goodwill. If the considera�on transferred and the pre-exis�ng fair value is less than the fair value of the iden�fiable net assets acquired, being a bargain purchase to the acquirer, the difference is recognised as a gain directly in profit or loss by the acquirer on the acquisi�on date, but only a�er a reassessment of the iden�fica�on and measurement of the net assets acquired, the non-controlling interest in the acquiree, if any, the considera�on transferred and the acquirer's previously held equity interest in the acquirer.

Business combina�ons are ini�ally accounted for on a provisional basis. The acquirer retrospec�vely adjusts the provisional amounts recognised and also recognises addi�onal assets or liabili�es during the measurement period, based on new informa�on obtained about the facts and circumstances that existed at the acquisi�on date. The measurement period ends on either the earlier of (i) 12 months from the date of the acquisi�on or (ii) when the acquirer receives all the informa�on possible to determine fair value.

cc. Compara�ve balances.

When required by Accoun�ng Standards, compara�ve balances have been adjusted to conform to changes in presenta�on for the current financial year.

2) LOSS FOR THE PERIOD.

Loss for the year included the following items: i) Revenue from con�nuing opera�ons Revenue from contracts with customers INTEGRATEDXRsales Other income Interest received R&D tax refund Foreign exchange gain Other revenue	Consolidated
	30 June 2023 30 June 2022 $ $ 25,331,634 17,217,685 211,531 44,026 - 377,435 - 242,673 756.157 1,012,114
Total income	26,299,322 18,893,933
The disaggrega�on of revenue from contracts with customers: Geographical regions AMEA APAC AMER	21,105,602 13,703,256 4,105,354 3,133,668 120,678 380,761
	25,331,634 17,217,685
Timing of revenue recogni�on: Transferred at a point in �me Transferred over �me	25,091,749 17,054,667 239,885 163,018
	25,331,634 17,217,685

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ii) Finance costs Interest costs Foreign exchange loss Other fnance costs	188,160 85,520 102,103 - 51,834 8,725
Total fnance costs	328,038 94,245
iii) Deprecia�on and amor�sa�on Deprecia�on Amor�sa�on	145,886 182,258 1,071,421 775,641
Total deprecia�on and amor�sa�on	1,217,307 957,899
iv) Other expenses Adver�sing expenses Rent expenses Travel Other administra�ve expenses	1,127,282 821,736 419,011 611,691 372,964 204,739 1,551,479 967,560
Total other expenses	3,470,736 2,605,726
v) Share based payments The total share-based payment expense recognised during the year are set out below: Ves�ng of Employee performance rights (Refer to note 15 ii) Ves�ng of Performance Rights rela�ng to business combina�on Ves�ng of Director performance rights (Refer to note 15 ii) Director performance rights expenses Issued shares to employees	- 216,090 1,225,116 600,000 - 787,500 508,956 288,679 125,806 -
Total share-basedpayments	1,859,878 1,892,269
vi) Impairment expense Impairment expense on intangible assets Expected credit losses	3,182,108 935,208 23,048 18,738
Total impairment expenses	3,205,156 953,946
3) INCOME TAX EXPENSE. i) Income tax expense Current tax Deferred tax
	Consolidated
	30 June 2023 30 June 2022 $ $ 55,887 150,339 (892) 17,474
Income tax expense reported in consolidated statement of proft or loss and other comprehensive income	54,995 167,813
ii) Numerical reconcilia�on ofincome tax expense to prima facie tax payable Loss from con�nuing opera�ons before income tax expense	(10,967,806) (6,932,619)
Tax at the Australian tax rate of 25% (2022:25%) Tax efect of amounts which are not deduc�ble (taxable) in calcula�ng taxable income Tax losses and other �ming diferences for which no DTA is recognised	(2,741,952) (1,733,155) 464,546 233,848 2,332,401 1,667,119
Income tax expense	54,995 167,813
iii) Recogniseddeferred tax liabili�es Other intangible assets (patents and development costs) Rights of use assets	626,665 615,930 - -
	626,665 615,930

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iv) Unrecognised deferred tax assets and liabili�es
The directors es�mate that the poten�al future income tax
benefts carried forward but not brought to account at year
end at the Australian corporate tax rate of 25% (2022: 26%)
are made up as follows:
Australian revenue losses	4,642,116	3,905,520
Australian capital losses	148,722	148,722
Australian CGT assets	171,076	171,076
Australian taxable temporarydiferences	219,932	433,116
Unrecognised net deferred tax assets	5,181,846	4,658,434

i. for the losses to be realized.
ii. the Group con�nues to comply with the condi�ons for deduc�bility imposed by tax legisla�on; and
iii.

4) CASH.

Cash at bank	Consolidated
	30 June 2023 30 June 2022 $ $ 11,359,203 14,869,095
Balanceper statement of cash fows	11,359,203 14,869,095
Refer to note 26 for the risk exposure analysis for cash and cash equivalents ii) Reconcilia�on of loss a�er income tax to net cash fows from opera�ng ac�vi�es Loss for theperiod	(11,022,802) (6,500,433)
Non-cash items Deprecia�on (including discon�nued opera�ons) Finance costs Credit loss allowances Share based payments Gain on investment Impairment expense Business acquisi�on cost Movements in assets/liabili�es (Increase)/decrease in trade and other receivables (Increase)/decrease in inventories Increase/(decrease) in tax liability Increase/(decrease)in otherpayable andprovisions	1,217,307 957,899 (55,701) 4,002 39,365 18,738 1,859,878 1,292,269 12,048 14,032 3,182,108 935,208 6,721 - (7,478,631) (1,343,564) 665,016 (257,360) (3,278) 63,493 4,099,734 3,569,638
Net cash ou�low from opera�ngac�vi�es	(7,478,237) (1,246,078)

iii)

a. Share based payments.

The Company issued shares in lieu of services rendered during the year (Note 14).

b. JMC Group considera�on securi�es.

The Company issued securi�es in considera�on for the acquisi�on of JMC Group

5) RECEIVABLES.

Trade receivables (i) Less: credit loss allowances	Consolidated
	30 June 2023 30 June 2022 $ $ 12,025,659 3,859,020 (230,932) (179,273)
Other receivables Prepayments	11,794,727 3,679,747 1,352,112 2,209,863 500,632 318,603
Total receivables	13,647,471 6,208,213

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Allowance for expected credit losses.

The Group has recognised a loss of $23,048 in respect of the expected credit losses for the year ended 30 June 2023.

Refer to Note 26 for the risk exposure analysis for receivables.

i.
All receivables apart from the balance detailed below in (ii) are non-interest bearing. There are no receivables where the fair value would be materially different from the current carrying value. The Group reviews all receivables for impairment. Any receivables which are doub�ul have been provided for. Based on past experience all receivables where no impairment has been recognised are not considered to be impaired. No other class of financial asset is past due.

6) INVENTORIES.

Raw material and consumables Finished goods Work inprogress	Consolidated
	30 June 2023 30 June 2022 $ $ 188,871 159,941 447,338 1,068,770 40,007 112,520
Total	676,216 1,341,231

7) PROPERTY, PLANT & EQUIPMENT.

Ofce and computer equipment Ofce and computer equipment at costs Less:accumulated deprecia�on	Consolidated
	30 June 2023 30 June 2022 $ $ 1,275,007 787,087 (736,835) (515,106)
	538,172 271,981
Plant & machinery and industrial equipment Plant & machinery and industrial equipment at cost Less: accumulated deprecia�on	40,492 88,843 (30,983) (68,247)
	9,509 20,596
Leasehold Improvements Leasehold Improvements at cost Less: accumulated deprecia�on	4,898 - (2,443) -
	2,455 -

Totalproperty, plant,and equipment	550,136 292,577

	Ofce and	Plant &	Leasehold	Total
	computer	machinery and	improvements
	equipment	industrial
		equipment
Consolidated	$	$	$	$
Balance at 1 July 2021	204,848	35,109	-	239,957
Addi�ons	163,956	-	-	163,956
Deprecia�on expense	(92,580)	(13,425)	-	(106,005)
Foreign exchange	(4,243)	(1,088)	-	(5,331)
	271,981	20,596	-	292,577
Balance at 30 June 2022	271,981	20,596	-	292,577
Addi�ons	360,810	-	4,649	365,459
Reclassifca�on	10,180	(10,180)	-	-
Deprecia�on expense	(141,964)	(1,602)	(2,320)	(145,886)
Foreign exchange	37,167	695	124	63,599

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Balance at 30 June 2023 538,174 9,509 2,455 550,136	Balance at 30 June 2023 538,174 9,509 2,455 550,136
8) RIGHT-OF-USE ASSETS. Right of use asset – land and buildings Less: accumulated amor�sa�on
	Consolidated
	30 June 2023 30 June 2022 $ $ 986,581 930,002 (664,922) (505,923)
Total	321,660 424,079

extend. The leases have various escala�on clauses. On renewal, the terms of the leases are renego�ated. The Group also leases plant and equipment under agreements of three years.

9) INTANGIBLE ASSETS.

Goodwill Acquisi�on – Vec�on Italy Srl Acquisi�on – Mindesk Group Less: Impairment Acquisi�on – Blank Canvas Acquisi�on – JMC Group	Consolidated
	30 June 2023 30 June 2022 $ $ 850,000 850,000 3,599,071 3,599,071 (972,812) - 490,020 490,020 3,742,355 3,742,355
Total	7,708,634 8,670,062
Intellectual property Intellectual property at cost Less: impairment	2,825,178 2,811,417 (1,891,703) -
	933,475 2,811,417
Other intangible assets (so�ware patents and development costs) Other intangible assets at cost Less: impairment Less: accumulated amor�sa�on	10,473,309 7,922,370 (1,251,175) (933,581) (2,400,946) (1,422,270)
	6,821,190 5,566,519

Total intangible assets	15,463,298 17,047,998

	Goodwill	Intellectual	So�ware patents	Total
		property	and development
			costs
Consolidated	$	$	$	$
Balance at 1 July 2021	8,670,062	2,811,417	5,487,833	16,969,312
Amor�sa�on expense	-	-	(744,218)	(744,218)
Addi�ons	-	-	1,905,365	1,905,365
Impairment of assets	-	-	(933,582)	(933,582)
Foreign exchange	-	-	(168,879)	(168,879)
Balance at 30 June 2022	8,670,062	2,811,417	5,546,519	17,027,998
Balance at 1 July 2022	8,670,062	2,811,417	5,546,519	17,027,998
Amor�sa�on expense	-	-	(1,071,421)	(1,071,421)
Addi�ons	-	13,062	2,667,153	2,680,215
Impairment of assets	(972,812)	(1,891,703)	(317,593)	(3,182,108)
Foreign exchange	11,384	699	(3,469)	8,614

ANNUAL REPORT FY2023

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Balance at 30 June 2023 7,708,634 933,475 6,821,190 15,463,298

Goodwill Impairment Tes�ng

the cash-genera�ng units (CGUs) was determined by a value-in-use calcula�on using a discounted cash flow model, based on a five to sevenyear project period together with a terminal value approved by management. The forecast budget process was developed based on revenue expecta�ons on exis�ng customer contracts along with ongoing opportuni�es. Key assump�ons are those to which the recoverable amount of an asset or cash-genera�ng unit is most sensi�ve. The following key assump�ons were used in the discounted cash flow models:

	Vec�on Italy	Mindesk Group	Blank Canvas	JMC Group
Pre-tax discount rate	22.50%	20.23%	22.75%	20.41%
Average projected revenue growth rate	42%	28%	21%	5%
Cash fow growth rate for terminal value	2.00%	2.00%	2.00%	2.00%
EUR to AUD exchange rate	0.6097	0.6097	N/A	0.6097

adjusted for the division, the risk-free rate and vola�lity of the share price rela�ve to market movements.

Management believes the above-projected revenue growth rate is reasonable based on the following factors:

i. New salespeople hired in the local market;
ii. Cisco partnership crea�ng increased opportuni�es across product suite;
iii. Tenders already in the pipeline which, if won will create further visibility;
iv. Client opportuni�es are currently being nego�ated.

Based on the above, no goodwill impairment expense was recorded other than in rela�on to Mindesk CGU of $954,767, since the recoverable amounts of other CGUs exceeded the carrying amounts. In determining the other intangible assets impairment, management have concluded that the carrying amount of so�ware within the Mindesk Group CGU and the intellectual property within the Vec�on Itlay CGU exceed their recoverable amount and resulted in an impairment of $317,593 and $1,891,703 respec�vely.

As disclosed in note 1(d), judgements and es�mates in respect of impairment tes�ng have been made. Should these judgments and es�mates not occur the recoverable amount of the CGUs may be lower than the carrying amount. The sensi�vi�es are as follows:

	Vec�on Italy	Mindesk Group	Blank Canvas	JMC Group
Increase in pre-tax discount rate to:	> 29.50%	> 22%	> 40%	> 36%
Decrease in average projected revenue growth	< 22%	< 25%	< 18%	< 69%
rate to:

10) TRADE AND OTHER PAYABLES.

Unsecured liabili�es: Trade payables Sundry creditors and accruals	Consolidated
	30 June 2023 30 June 2022 $ $ 10,212,199 3,670,651 756,571 3,303,261
Total	10,968,770 6,973,912

the current carrying value.

11) EMPLOYEE BENEFITS.

Employee benefts – current Employee benefts	Consolidated
	30 June 2023 30 June 2022 $ $ 72,265 78,250

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of service and also those where employees are en�tled to pro-rata payments in certain circumstances. The en�re amount is presented as current, since the Group does not have an uncondi�onal right to defer se�lement.

Employee benefts – non-current
Employee benefts	544,316	433,455

12) LEASE LIABILITIES.

Lease liabili�es- current Current lease liabili�es	Consolidated
	30 June 2023 30 June 2022 $ $ 211,396 194,613
Lease liabili�es– non-current Non-currentlease liabili�es	164,579 286,293-

13) BORROWINGS.

Borrowings - current Borrowings	Consolidated
	30 June 2023 30 June 2022 $ $ 8,113,959 1,198,728
Borrowings – non-current Borrowings	2,193,683 2,415,293-

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Terms of the borrowings:

i. A Banco BPM bank loans by JMC Group. The loans have a 6 years terms with expiry date of 13 August 2026. The loans have a variable Interest rate of 1.25% + EURIBOR 3m 360.
ii. A Banca Monte Dei Paschi Di Siena (MPS) bank loan by JMC Group. The loan has a 71 months terms with an expiry date of 31 October 2026. The loan has a variable Interest rate of 0.45% + EURIBOR 6m 360.
iii. 2024. The average overall effec�ve rate is 8.95%.
iv. 2026. The average overall effec�ve rate is 10.81%.
v. rate of 1.99%, 1.99%, 4.39% and 13.08%.
vi.
vii.
viii. rate of 1.80% plus EURIBOR 3m.
ix. A variable rate bank loan provided by Banco BPM bank loans to Xinntex. The loans have a 6 years terms with expiry date of 11 March 2027. The loans have a variable Interest rate of 1.4% + EURIBOR 3m 360.
x.
xi.
xii. A variable rate bank loan provided by Intesa San Paolo to Vec�on Italy. The loan has a 6 years term with an expiry date of 9 June 2026. The loan has a variable Interest rate of circa 1.75% plus EURIBOR 1m 360.
xiii.
xiv. (TAN).
xv. (TAN).
xvi.
xvii. 2.75%.

14) ISSUED CAPITAL.

	30 June 2023	30 June 2022	30 June 2022	30 June	2023	30 June	2022
	Shares No.	Shares No.		$		$
Ordinary shares	1,126,588,969	1,109,924,294		46,591,700		44,611,306
Movement in share capital
Date	Details		Number of shares	Issue price			$
1 July2022	Openingbalance		1,109,924,294		-	44,611,306
25 November 2022	Shares issued in lieu of salary		2,419,355		$0.052		125,806
25 November 2022	Ves�ng of performance rights		377,791		$0.052		37,779
25 November 2022	Ves�ng of performance rights		1,220,015				122,002
25 November 2022	Ves�ng of performance rights		11,000,000		$0.052	1,100,000
1 December 2022	Shares issued in recogni�on of mee�ng milestones		2,867,529		$0.05		217,757
	as approved by shareholders
31 December 2022	Ves�ng of performance rights		5,132,472				389,755
25 November 2022	Shares buyback held bysubsidiaries		(6,352,487)				(12,705)
30 June 2023	Closing balance		1,126,588,969			46,591,700

Ordinary shares

Ordinary shares en�tle the holder to par�cipate in dividends and the proceeds on the winding up of the company in propor�on to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

ANNUAL REPORT FY2023

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15) RESERVES.
				Consolidated
			30 June 2023		30 June 2022
				$	$
Share based payment	reserve			7,434,884	11,083,771
Other reserve				(123)	-
Foreign currency transla�on reserve				(213,719)	(602,770)
				7,221,042	10,481,001
		30 June 2023	30 June 2022	30 June 2023	30 June 2022
		Op�ons No.	Op�ons No.	$	$
iii. Op�ons.		59,006,452	59,006,452	5,795,648	5,795,648
Date	Details			Number of op�ons	$
1 July 2022	Opening balance			59,006,452	5,795,648
30 June 2023	Closingbalance			59,006,452	5,795,648
		30 June 2023	30 June 2022	30 June 2023	30 June 2022
		Performance	Performance	$	$
		Rights No.	Rights No
iii. Performance	rights.
Performance	rights – directors and	23,295,611	85,893,417	1,639,236	5,288,123
corporate advisor
		23,295,611	85,893,417	1,639,236	5,288,123
Date	Details			Performance Rights	$
1 July2022	Openingbalance			85,893,417	5,288,123
25 November 2022	Ves�ng of Performance Rights			(377,791)	(37,779)
25 November 2022	Lapse of Performance Rights			(1,220,015)	(122,002)
25 November 2022	Share based payment			-	(389,755)
25 November 2022	Ves�ng of Performance Rights			(11,000,000)	(1,100,000)
25 November 2022	Lapse of Performance Rights			(50,000,000)	(3,515,666)
1 December 2022	Recogni�on of Vendor	Rights ves�ng		-	(217,757)
30 June 2023	Share basedpayment			-	1,734,073
30 June 2023	Closingbalance			23,295,611	1,639,236

a) Movement of Performance rights

During the year, the following performance rights vested:

11,000,000 performance rights issued to Blank Canvas on sa�sfac�on of ves�ng condi�ons

In addi�on, 2,867,528 shares were issued to a director on sa�sfac�on of ves�ng condi�ons of vendor rights. Approval was sought from shareholders as the rights issued in this regard had technically lapsed and the grant was to a director and $217,757 was recognised.

During the year, the following rights were cancelled:

1,220,015 performance rights issued to JMC Group Srl in exchange for the Company's shares held by JMC Group Srl.

During the year, the following rights lapsed in accordance with the terms of their issue:

a�ached were no longer capable of being achieved.

ANNUAL REPORT FY2023

PAGE 54

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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16) ACCUMULATED LOSSES.

Opening balance Loss for the period Expired Performance Rights De-recogni�on of non-controllinginterest	Consolidated
	30 June 2023 30 June 2022 $ $ (27,335,684) (20,614,465) (10,820,472) (7,100,433) 4,215,665 - 29,837 -
Closingbalance	(33,910,654) (27,714,898)

17) NON-CONTROLLING INTEREST.

Issued capital Accumulated losses	Consolidated
	30 June 2023 30 June 2022 $ $ 5,724 5,724 (717,104) (484,938)
	(711,380) (479,214)

18) LOSS PER SHARE.

Earnings per share for loss from con�nuing opera�ons Loss a�er income tax Non-controlling interest Loss a�er income tax from con�nuing opera�ons a�ributable to the members of Vec�on Technologies Limited Basic earnings per share Diluted earnings per share Earnings per share for loss Loss a�er income tax a�ributable to the members of Vec�on Technologies Limited Basic loss per share Diluted loss per share Weighted average number of ordinary shares users in calcula�ng basic and diluted loss per share	Consolidated
	30 June 2023 30 June 2022 $ $ (11,022,803) (7,100,432) (202,330) (418,945) (10,820,474) (6,681,488) (2.399) (0.607) (2.399) (0.607) (11,022,803) (7,100,433) (2.443) (0.624) (2.443) (0.624) 451,116,632 1,070,785,046

Earnings per share for loss from con�nuing opera�ons
Loss a�er income tax
Non-controlling interest
Loss a�er income tax from con�nuing opera�ons
a�ributable to the members of Vec�on Technologies
Limited
Basic earnings per share
Diluted earnings per share
Earnings per share for loss
Loss a�er income tax a�ributable to the members of
Vec�on Technologies Limited
Basic loss per share
Diluted loss per share
Weighted average number of ordinary shares users in
calcula�ng basic and diluted loss per share

Consolidated

30 June 2023
30 June 2022
$ $ (11,022,803)
(7,100,432)
(202,330)
(418,945)
(10,820,474)
(6,681,488)
(2.399)
(0.607)
(2.399)
(0.607)
(11,022,803)
(7,100,433)
(2.443)
(0.624)
(2.443)
(0.624)
451,116,632
1,070,785,046

ANNUAL REPORT FY2023

PAGE 55

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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19) SEGMENT REPORTING.

		Discon�nued	IT		Outsourced	Corporate	Corporate	Total
		opera�ons			services
		$	$		$	$		$
Year ended 30	June
2023
Segment revenue		-	20,472,244		4,167,398		691,992	25,331,634
Other revenue		-		643,647	117,601		206,440	967,688
Signifcant items
Changes inventories	in	-		(563,891)	-		-	(563,891)
Variable cost of	sales	-	(17,339,228)		(1,377,066)		-	(18,716,294)
Employee beneft expense		-	(3,317,036)		(1,756,548)		(746,700)	(5,820,285)
Consul�ng and professional fees		-		(836,407)	(104,695)	(1,123,662)		(2,064,764)
Financing costs		-		(202,167)	(44,275)		(95,655)	(342,097)
Deprecia�on amor�sa�on	and	-	(1,100,739)		(58,860)		(57,708)	(1,217,307)
Other administra�ve expenses		-	(1,487,988)		(941,322)	(6,113,174)		(8,542,493)
Tax expenses		-		(54,995)	-		-	(54,995)
Segment opera�ng			(3,786,562)		2,232	(7,238,466)		(11,022,811)
(loss)a�er tax
Year ended 30	June
2022
Segment revenue		-	13,970,209		3,110,533		136,943	17,217,685
Other revenue		-		1,632,477	-		43,771	1,676,248
Changes	in	-		84,832	-		-	84,832
inventories
Variable cost of	sales	-	(10,264,730)		(1,273,646)		-	(11,538,376)
Employee beneft		-	(3,357,319)		(1,216,786)		(266,336)	(4,840,441)
expense
Consul�ng	and	-	(2,149,179)		(83,849)		(774,067)	(3,007,095)
professional fees
Financing costs		-		(16,970)	(5,674)		(71,601)	(94,245)
Deprecia�on	and	-		(899,154)	(1,037)		(57,708)	(957,899)
amor�sa�on
Other administra�ve		-	(2,000,768)		(718,199)	(2,754,361)		(5,473,328)
expenses
Tax expenses		-		(167,813)	-		-	(167,813)
Segment opera�ng		-	(3,168,416)		(188,658)	(3,743,359)		(7,100,433)
(loss)a�er tax
Segment assets
At 30 June 2023		-	20,288,915		917,554	24,950,139		42,960,270
Includes:
Non-current	asset	-		303,276	62,183		-	365,459
addi�ons
At 30 June 2022		(3,196,338)	13,612,453		961,708	28,666,498		40,203,719
Segment liabili�es
At 30 June 2023		-	15,132,434		955,580		8,282,306	24,390,226
At 30 June 2022		19,906		8,733,779	1,001,966		2,470,839	12,226,310

ANNUAL REPORT FY2023

PAGE 56

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Descrip�ons of assets
The Group’s execu�ve directors examine the Group’s performance from a core opera�ons perspec�ve and two reportable segments of its con�nuing business, being IT and outsourced services.

2. Segment revenue and results

Segment revenue reported above represents revenue generated from external customers. The accoun�ng policies of the reportable segments are the same as the Group’s accoun�ng policies describes in note 1. Segment profit represents the profit before tax earned by each segment without alloca�on of central corporate and administra�on costs, employee benefits, deprecia�on and amor�sa�on, and finance costs. This is the measure reported to the chief opera�ng decision maker for the purposes of resource alloca�on and assessment of segment performance.

3. Segment assets and liabili�es

used jointly by reportable segments are allocated on the basis of the revenues earned by individual reportable segments. All liabili�es are allocated to reportable segments other than borrowings, and corporate creditors. Liabili�es for which reportable segments are jointly liable are allocated in propor�on to segment assets.

20) AUDITOR’S REMUNERATION.

Audit and other assurance services – RSM Australia Partners Audit and review of fnancial statements	Consolidated
	30 June 2023 30 June 2022 $ $ 75,300 60,350
Other services – RSM Australia Partners Tax services Prepara�on of tax return Transac�on support/advisoryservices	11,000 10,000 6,000 6,000 - 22,900
Audit services – unrelated frm Audit and review of fnancial statements	92,300 38,900 77,525 95,935

ANNUAL REPORT FY2023

PAGE 57

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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21) INTEREST IN SUBSIDIARIES.

with the accoun�ng policy described in note 1:

	Date of the gain	Country of	Ownership of interest	Ownership of interest
	of control	incorpora�on	2023	2022
			%	%
Sell Lease Property Pty Ltd	16/09/2016	Australia	100	100
Vec�on Consul�ng Pty Ltd	16/09/2016	Australia	100	100
Vec�on Australia Pty Ltd	16/09/2016	Australia	100	100
ServTech Global PH Inc	08/12/2016	Philippines	100	100
Vec�on India Private Limited	23/03/2017	India	100	100
Vec�on Italy Srl	12/04/2020	Italy	100	100
Mindesk Inc	29/04/2020	USA	100	100
Mindesk Srl	29/04/2020	Italy	100	100
Blank Canvas Studio (Aus) Pty Ltd	27/04/2021	Australia	100	100
JMC Group Srl	31/05/2021	Italy	100	100
Vec�on Global Services Srl	10/11/2022	Italy	100	100
Vec�on EMEA Srl	25/10/2022	Italy	100	100

in accordance with the accoun�ng policy described in note 1:

	Date of the gain	Country of	Parent	Parent	Non-controlling interest	Non-controlling interest
	of control	incorpora�on	Ownership interest		Ownership interest
			2023	2022	2023	2022
			%	%	%	%
Vec�on Health Srl1	26/3/2021	Italy	60	60	40	40
Xinntex Srl2	31/05/2021	Italy	100	64	0	36
JMC AMEA Limited3	31/05/2021	Abu Dhabi	70	70	30	30

Vec�on Health Srl is the subsidiary of Vec�on Italy Srl. The non-controlling interests hold 40% of the vo�ng rights of Vecton Health Srl.
Xinntex SRL and JMC AMEA Ltd are subsidiaries of JMC Group Srl. The non-controlling interests hold 36% and 30% of the vo�ng rights respec�vely. On 29 June 2023 JMC Group Srl acquired the non-controlling interest of Xinntex Srl.

22) RELATED PART TRANSACTIONS.

i. Transac�ons with directors and key management personnel.

The Group may enter into agreements for services rendered with individuals (or an en�ty that is associated with the individuals) during the ordinary course of business.

Key management personnel compensa�on.

Short-term benefts Share-basedpayments	Consolidated
	30 June 2023 30 June 2022 $ $ 1,038,474 705,860 917,464 288,679
	1,955,938 994,538

ANNUAL REPORT FY2023

PAGE 58

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Director	Transac�on	Transac�on value	Transac�on value	Outstanding balance	Outstanding balance
		2023	2022	2023	2022
		$	$	$	$
Mr Gianmarco Biagi and Mr Lorenzo Biagi	Other revenue (a) Other service cost (b) Revenue from services(c)	23,726 33,872 1,483	7,764 36,003 8,700	- 136 159,511	3,391 2,818 78,688
Mr Jacopo Merli	Other service cost (d)	231.800	-	91.048	-

(a) The Company’s subsidiary Vec�on Italy Srl received services from companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi.

(b) The Company’s subsidiary Vec�on Italy Srl paid to companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi for service provided.

(c) The Company’s subsidiary Vec�on Italy Srl received services from companies associated with Mr Gianmarco Biagi and Mr Lorenzo Biagi for service provided.

(d) The Company's subsidiaries paid to acquire services to companies and individual associated with Mr Jacopo Merli.

ii. Loans to directors.

Loan amounted to $153,791 was provided to Mr Jacopo Merli. This loan is fully repayable at an interest rate of 5%. The loan is to be repaid by 30 June 2024.

23) PARENT ENTITY INFORMATION.

The following details informa�on related to the Parent en�ty, Vec�on Technologies Limited, at 30 June 2023. The informa�on presented here has been prepared using consistent accoun�ng policies as presented in ote 1.

	30 June 2023	30 June 2022
	$	$
Current assts	4,927,072	11,373,663
Non-current assets	20,857,513	20,686,677
Total assets	25,784,585	32,060,340
Current liabili�es	7,655,642	9,357,973
Non-current liabili�es	-	677,901
Total liabili�es	7,655,642	10,035,874
Contributed equity	46,591,701	44,611,396
Op�on reserve	7,434,761	11,683,771
Accumulated losses	(35,897,519)	(36,720,711)
Total equity	18,128,943	19,574,456
Loss for the year	(3,940,591)	(7,775,536)
Other comprehensive loss for theyear	-	-
Total comprehensive loss for theyear	(3,940,591)	(7,775,536)

ANNUAL REPORT FY2023

PAGE 59

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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Guarantees in rela�on to subsidiaries.

Vec�on Technologies Limited does not have any guarantees in rela�on to subsidiaries (2022: nil).

Con�ngent liabili�es.

Vec�on Technologies Limited has no material con�ngent liabili�es which are not disclosed in this report as at 30 June 2023 (2022: nil) Commitments.

Vec�on Technologies Limited had no capital commitments as at 30 June 2023 and 30 June 2022.

The accoun�ng policies of the parent en�ty are consistent with those of the Group, as disclosed in note 1, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent en�ty.
Investments in associates are accounted for at cost, less any impairment, in the parent en�ty.
Dividends received from subsidiaries are recognised as other income by the parent en�ty and its receipt may be an indicator of an impairment of the investment.

24) FINANCIAL ASSETS.

Listed equity shares at fair value to proft or loss (i) Interest rate swap	Consolidated
	30 June 2023 30 June 2022 $ $ 28,478 40,526 55,701 -
	84,179 40,526

(i) The Australian listed equity shares held for trading at fair value through profit or loss $12,048 (2022: $18,621). The fair value has been determined directly by reference to published price quota�ons in an ac�ve market for iden�cal securi�es. They are deemed to be Level 1 securi�es in accordance with the AASB 13 fair value measurement hierarchy and hence there is no subjec�vity in rela�on to their value.

25) FINANCIAL RISK MANAGEMENT.

risk management program focuses on the unpredictability of financial markets and seeks to minimise poten�al adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed.

Financial assets Cash and cash equivalents Receivables (current) Listed investments Deriva�ve instruments	Consolidated
	30 June 2023 30 June 2022 $ $ 11,359,203 14,869,095 13,146,840 5,895,962 28,478 40,526 55,701 -
	24,590,222 20,805,583
Financial liabili�es Payables (current) Interest bearing liabili�es	12,447,543 7,046,935 10,683,616 4,094,927
	23,131,159 11,141,862

ANNUAL REPORT FY2023

PAGE 60

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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a. Market risk.

i. Interest rate risk.

than liquid funds on deposit. As such, the Group’s income, and opera�ng cash flows (other than interest income from funds on deposit and interest expense on the facility loan) are substan�ally independent of changes in market interest rates. The Group’s exposure to interest rate risk for each class of financial assets and liabili�es is set out below:

Financial assets Cash and cash equivalents at foa�ngrate	Consolidated
	30 June 2023 30 June 2022 $ $ 11,359,203 14,869,095
Financial liabili�es Interest bearingliabili�es	10,683,616 4,094,927

Group sensi�vity

At 30 June 2023, if interest rates had changed by +/- 100 basis points from the year-end with all other variables held constant, the loss for the year would have been $113,592 lower/higher (2022: $148,691 higher/lower), as a result of a lower/higher interest income from cash and cash equivalents.

ii. Commodity risk pricing.

The Group is not exposed to commodity risk price risk.

b. Credit risk.

as well as credit exposures to customers. For banks and financial ins�tu�ons, only independently rated par�es with a minimum of ‘A’ are accepted. The Group trades only with recognised, trustworthy third par�es. It is the Group’s policy to perform credit verifica�on procedures in rela�on to any customer’s financial posi�on and any past experience to set individual risk limits as determined by the Board.

Cash and cash equivalents Receivables (current) Deriva�ve instruments	Consolidated
	30 June 2023 30 June 2022 $ $ 11,359,203 14,869,095 13,647,471 5,895,962 55,701 -
	25,062,375 20,765,057

ANNUAL REPORT FY2023

PAGE 61

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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c. Liquidity risk.

access to capital markets. It is the policy of the Board to ensure that the Group is able to meet its financial obliga�ons and maintain the flexibility to pursue a�rac�ve investment opportuni�es through keeping commi�ed credit lines available where possible, ensuring the Group has sufficient working capital and preserving the 15% share issue limit available to the Company under the ASX Lis�ng Rules. The Group manages liquidity risk by con�nuously monitoring the forecast and actual cash flows and matching the maturity profiles of

have been drawn up based on the undiscounted cash flows of financial liabili�es based on the earliest date on which the financial liabili�es are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturi�es and therefore these totals may differ from their carrying amount in the statement of financial posi�on.

	Weight	1 year or less	Between	1	and 2	Between 2	and	Over 5	Remaining contractual
	ed		years			5 years		years	maturi�es
	average
	interest
	rate
Consolidate	%	$	$			$		$	$
d 30 June
2023
Payables		10,968,770			-		-	-	10,968,770
Interest
bearing
Borrowings	1.29%	8,113,959		1,063,168		1,130,515		-	10,307,642
Lease	2.47%	221,965			172,807		-	-	394,772
liabili�es
		19,304,694		1,235,975		1,130,515		-	21,671,184
Consolidate	%	$	$			$		$	$
d 30 June
2022
Non-	-	-			-		-	-	-
interest
bearing
Payables	-	7,046,935			-		-	-	7,046,935
Interest	-	-			-		-	-	-
bearing
Borrowings	2.15%	1,152,320			703,355	1,624,627		20,825	3,501,127
Lease	2.47%	209,441			201,879	131,027		-	542,347
liabili�es
	-	8,408,696			905,234	1,755,654		20,825	11,090,409

d. Fair value measurements.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair value due to their short-term nature. The fair value of financial liabili�es for disclosure purposes is es�mated by discoun�ng the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

e. Capital risk management.

The Group manages its capital to ensure that en��es in the Group will be able to con�nue as a going concern while maximising the return to stakeholders.

ANNUAL REPORT FY2023

PAGE 62

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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The capital structure of the Group consists of cash equivalents and equity a�ributable to equity holders of the Parent. The Group is not subject to externally imposed capital requirements.

f. Foreign exchange risk.

(EUR)/AUD, and Indian Rupee (INR)/AUD exchange rates. The Group also has transac�onal currency exposures. Such exposure arises from sales or purchases by an opera�ng en�ty in currencies other than the func�onal currency.

The Group had the following exposure to foreign currency:

	30 June			30 June 2022
	EUR	INR		EUR	INR
	A$	A$		A$	A$
Financial assets
Cash and cash equivalents	7,441,564		10,910	3,446,506		4,325
Receivables	13,928,896		39,026	5,902,426		27,783
	21,370,460		49,936	9,348,932		32,108
Financial liabili�es
Payables	12,953,614		86,567	6,964,122		25,531
	12,953,614		86,567	6,964,122		25,531

Net balance	8,416,846		(36,631)	2,384,810		6,576

the Group for the period to 30 June 2023, with all other variables held constant:

			30 June		30 June 2022
			Proft	Equity	Proft	Equity
			$	$	$	$
EUR, INR increasing AUD	10%	against	838,022	838,022	239,139	239,139
EUR, INR decreasing AUD	10%	against	(838,022)	(838,022)	(239,139)	(239,139)

26) COMMITMENTS.

The Group did not have any commitments as at repor�ng date.

27) CONTINGENT LIABILITIES.

The Group did not have any con�ngent liabili�es as at repor�ng date.

28) EVENTS OCCURING AFTER THE REPORTING PERIOD.

Following the end of the period, the Company completed the acquisition of fashion and retail focused XR company Invrsion S.r.l. In consideration for this acquisition, on 5 September 2023, the Company issued 62,000,000 performance rights.

Other than the above, there were no other matters or circumstances arising since the end of the reporting period that have significantly affected or may significantly affect the operations of the Company and the results of those operations or the state of the affairs of the Company in the financial period subsequent to 30 June 2023.

ANNUAL REPORT FY2023

PAGE 63

DIRECTORS’ DECLARATION

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In the opinion of the directors of Vec�on Technologies Limited:

a.
i. on that date; and
ii. complying with Accoun�ng Standards, the Corpora�ons Regula�ons 2001 and other mandatory professional repor�ng requirements; and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declara�on has been made a�er receiving the declara�ons required to be made to the directors in accordance with sec�on 295A of the Corpora�on Act 2001 for the financial year ending 30 June 2023.

Signed in accordance with a resolu�on of the directors.

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Mr Bert Mondello Chairman Vec�on Technologies Limited

29 September 2023 Perth, Western Australia

ANNUAL REPORT FY2023

PAGE 64

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF VECTION TECHNOLOGIES LIMITED

Opinion

We have audited the financial report of Vection Technologies Limited (Company) and its subsidiaries (Group), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the Group's financial position as at 30 June 2023 and of its financial performance for the year then ended; and
(ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board's APES 110 Code of Ethics for Professional Accountants (Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor's report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

THE POWER OF BEING UNDERSTOOD

AUDIT | TAX | CONSULTING

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key Audit Matter	How our audit addressed this matter
*Revenue from customers* Refer to Note 2 in the financial statements
Revenue from customers for the year ended 30 June 2023 was $25,331,634. The primary revenue source is Integrated XR sales to customers. Revenue was considered a key audit matter because it is a significant account balance in the statement of profit or loss and other comprehensive income and the process of revenue recognition involves multiple revenue streams for services or products rendered.	Our audit procedures included: • Assessing the Group’s accounting policy for compliance with Australian Accounting Standards; • Obtaining an understanding of each of the revenue sources and the process for determining and recognising revenue; • On a sample basis, testing revenue recorded to supporting documentation; • Testing a sample of revenue transactions before and after the reporting date to assess whether revenue is recognised in the correct financial period; • Assessing the work performed by component auditors with respect to revenue recognised by the respective Group’s component entities; and • Assessing the disclosures in the financial statements.
*Carrying value of intangible assets* Refer to Note 9 in the financial statements
The Group has intangible assets of $15,463,298 as at 30 June 2023, comprising goodwill of $7,708,634 and other intangible assets of $7,754,664. The Group is required to test goodwill acquired in business combinations for impairment annually. In addition, the Group is required to assess at 30 June 2023 whether there is any indication that intangible assets may be impaired. If any such indication exists, the Group is required to estimate the recoverable amount of its other intangible assets.	Our audit procedures included: • Assessing the Group’s accounting policy for compliance with Australian Accounting Standards; • Critically evaluating management’s assessment of whether impairment indicators for other intangible assets were present at 30 June 2023; • Considering the appropriateness of the value in use models applied by the Group to assess the carrying value of intangible assets. This included evaluating the work performed by management’s expert and assessing the competency and objectivity of the expert;

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Key Audit Matter

We determined this to be a key audit matter due to the extent of management judgement and estimates involved in:

Testing goodwill for impairment including determining the cash generating unit ( CGU ) to which the goodwill relates and determining the recoverable amount of the related CGU utilising a value in use model which includes assumptions such as revenue growth rate, discount rate and terminal value growth rate;
Assessing whether indicators of impairment are present in relation to the Group’s other intangible assets; and
Where indicators of impairment are identified, determining the recoverable amount of the related intangible assets by utilising a value in use model which includes assumptions such as revenue growth rate and discount rates.

How our audit addressed this matter

Assessing the work performed by component auditors with respect to other intangible assets held within the respective Group’s component entities;
Considering the Group’s determination of their CGUs based on our understanding of the operations of the Group’s business and how the identifiable CGUs generate independent cash inflows;
Considering the appropriateness of the value in use models applied by the Group to assess the carrying value of CGUs to which goodwill was allocated. This included evaluating the work performed by management’s expert and assessing the competency and objectivity of the expert;
Challenging the Group’s forecast cash flows, EBITDA margin and growth assumptions;
Considering the sensitivity of the models by varying key assumptions, such as forecast EBITDA margins, discount rate, within a reasonably possible range;
• Working with our valuation specialists, we developed a discount rate range considered comparable using publicly available market data for comparable entities and assessed the integrity of the value in use models used;
• Checked the mathematical accuracy of the impairment expenses recognised and
• Assessing the adequacy disclosures included in the financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 30 June 2023 but does not include the financial report and the auditor's report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

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Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor's report.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2023.

In our opinion, the Remuneration Report of Vection Technologies Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

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RSM AUSTRALIA PARTNERS

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Perth, WA Dated: 29 September 2023

MATTHEW BEEVERS Partner

ADDITIONAL ASX INFORMATION

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NUMBER OF HOLDINGS OF EQUITY SECURITIES AS AT 31 AUGUST 2023.

The fully paid issued capital of the Company consisted of 1,126,588,969 ordinary fully paid shares held by 5,672 shareholders. Each share en�tles the holder to one vote.

DISTRIBUTION HOLDERS OF EQUITY SECURITIES AS AT 31 AUGUST 2023.

Holding ranges	Holders		Total unites	% issue share capital
Above 0 up to and including 1,000		77	13,593	0.00%
Above 1,000 up to and including 5,000		924	3,401,062	0.30%
Above 5,000 up to and including 10,000		1,100	8,589,151	0.76%
Above 10,000 up to and including 100,000		2,776	102,101,187	9.06%
Above 100,000		795	1,012,483,976	89.87%
Totals		5,672	1,126,588,969	100.00%
	Holders		Minimum Parcel Size	Units
Minimum $500 parcel at $0.038 per unit	3,269		13,158	1,111,098,074

SUBSTANTIAL SHAREHOLDERS AS AT 31 AUGUST 2023.

Sec�on 671B of the Corpora�ons Act are:

	Substan�al shareholder	Number of shares	% held
Ofcine 8k Srl		327,556,186	29.08%
Mr Jacopo merli		65,510,036	5.81%

TWENTY LARGEST SHAREHOLDERS OF QUOTED EQUITY SECURITIES AT 31 AUGUST 2023.

ANNUAL REPORT FY2023

PAGE 70

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

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	Substan�al shareholder	Number of shares
1	OFFICINE 8K S R L	327,556,186	29.08%
2	MR JACOPO MERLI	65,510,036	5.81%
3	CDP VENTURE CAPITAL SGR SPA	54,252,406	4.82%
4	PRIMO VENTURES SGR SPA	47,445,872	4.21%
5	BNP PARIBAS NOMINEES PTY LTD	31,613,997	2.81%

6	CITICORP NOMINEES PTY LIMITED	30,797,731	2.73%
7	CROSSBAY PTY LTD	15,390,000	1.37%
8	MRS PATRICIA ANNE SCUDDS	12,400,000	1.10%
9	MR PAUL BRENT CLAYTON	12,332,258	1.09%
10	HTC VIVE INVESTMENT (BVI) CORP	11,179,911	0.99%
11	TRADITIONAL SECURITIES GROUP PTY LTD	10,490,041	0.93%

12	MR YALEI MENG	10,480,072	0.93%
13	A11 VENTURE S R L	8,580,000	0.76%
14	SETTEPUNTONOVE SRL	8,000,000	0.71%
15	MR KIRIL RUVINSKY	7,788,629	0.69%
16	MR MARCEL ANTHONY REUBEN	7,244,850	0.64%

17	MR MARX LIN	7,000,000	0.62%
18	BNP PARIBAS NOMS PTY LTD	6,720,365	0.60%

19	SUPERHERO SECURITIES LIMITED	6,027,265	0.54%

20	MR ARTHUR BROMIDIS	5,500,000	0.49%
20	INDOMAIN ENTERPRISES PTY LTD	5,500,000	0.49%

ANNUAL REPORT FY2023

PAGE 71

AI assistant

VECTION TECHNOLOGIES LTD — Annual Report 2023

66017_rns_2023-09-28_ebaa9073-72ab-4a9b-94c1-b90565b484c9.pdf

Beyond Reality

ANNUAL REPORT 2023

TABLE OF CONTENTS

OUR JOURNEY

TECHNOLOGY ADVANTAGE

We provide end-to-end digitalization spanning ICT infrastructure, Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR), the Metaverse , and Artificial Intelligence (AI).

TECHNOLOGY ADVANTAGE

IntegratedXR Technology Stack

KEY MARKET SEGMENTS

Beyond reality 2023 I Vection Technologies Limited I Annual Report I 7

XR CASE STUDIES - MAROTTA

CHALLENGES

SOLUTION

EVIDENCE

Potential outcomes:

XR CASE STUDIES - HUMANITAS

CHALLENGES

SOLUTION

EVIDENCE

Potential outcomes:

GLOBAL FOOTPRINT

FY23 FINANCIAL HIGHLIGHTS

Closing Cash

$ 19.2m

Net Assets

Underlying EBITDA:[1,2]

Organic growth generation:

Power of INTEGRATEDXR[®]

NOTES

CEO’S REPORT

Fostering organic growth through innovation:

Strategic adaptation to dynamic markets:

Harmonizing Technologies:

Balancing growth and customer-centric approach:

Financial performance and forward Path:

DIRECTORS’ REPORT

DIRECTORS

PRINCIPAL ACTIVITIES

DIVIDENDS

REVIEW OF OPERATIONS

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

EVENTS OCCURRING AFTER THE REPORTING PERIOD

LIKELY DEVELOPMENTS AND EXPECTED RESULTS OF OPERATIONS

RISK AND GOVERNANCE

Sales cycle variability.

Data security and hos�ng risks.

Regulatory challenges.

Mul�-jurisdic�onal risks.

Economic condi�ons impact.

Market condi�ons and share price vola�lity.

ENVIRONMENTAL REGULATION

INFORMATION ON DIRECTORS

INFORMATION ON COMPANY SECRETARY

MEETINGS OF DIRECTORS

SHARE OPTIONS

PERFORMANCE RIGHTS

REMUNERATION REPORT – AUDITED

Service Contracts

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

e. Details of remunera�on.

ii. Loans to directors.

i. Shareholding.

ii. Op�on holdings.

vi. Use of remunera�on consultants.

END OF AUDITED REMUNERATION REPORT

INSURANCE OF OFFICERS

INDEMNITY AND INSURANCE OF AUDITOR

NON-AUDIT SERVICES

CONFIRMATION UNDER ASX LISTING RULE 4.10.19

PROCEEDINGS ON BEHALF OF THE COMPANY

AUDITOR’S INDEPENDENCE DECLARATION

RSM Australia Partners

AUDITOR’S INDEPENDENCE DECLARATION

RSM AUSTRALIA PARTNERS

THE POWER OF BEING UNDERSTOOD

ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2023

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

VECTION TECHNOLOGIES LTD Annual Report 2023